gangzoom Posted March 26, 2016 Share Posted March 26, 2016 (edited) Just want to check am not going mad.... Coming up to the end of our last 5 year financial plan, and working out what next for the next 5 years. Original plan was to clear the mortgage with savings, buy a Tesla with money currently in Santander 1-2-3 accounts, and than move to a bigger house after 2020 (or leave the UK). But out of interest I had a quick look at re-mortgage rates...1.5% fixed for 2 years with NO product fee. Even a 5 year fixed is only 2.4% with no fee.....IF Santander keeps the 1-2-3 account going at 3%, over 5 years we'll get back £6k. which more than covers the interest rate payments on a 5 year fixed. I've never been a fan of debt, but the way interests rates are now surely it makes no sense to buy a car out right with cash when if your a home owner you can get a loan at 1.5%. Clearly you have to make sure you pay the additional mortgage debt off at any sign of rising interest rates, but as long as your saving are earning your more interest than what your mortgage is costing you, it makes no sense to clear the debt?? It really is a bizarre financial world we are currently living in!! Edited March 26, 2016 by gangzoom 1 Quote Link to comment Share on other sites More sharing options...
Dynamic Turtle Posted March 26, 2016 Share Posted March 26, 2016 Money is effectively free (when you factor in CPI of 1% too). Debt, however, remains a liability. Have to say the 123 account is incredibly generous, considering switching to it myself... Quote Link to comment Share on other sites More sharing options...
Ebized Posted March 26, 2016 Share Posted March 26, 2016 And don't forget the cash backs on the 1-2-3 accounts..... Quote Link to comment Share on other sites More sharing options...
Dynamic Turtle Posted March 26, 2016 Share Posted March 26, 2016 Colin how are you enjoying the A45? Quote Link to comment Share on other sites More sharing options...
sipar69 Posted March 26, 2016 Share Posted March 26, 2016 Just want to check am not going mad.... Coming up to the end of our last 5 year financial plan, and working out what next for the next 5 years. Original plan was to clear the mortgage with savings, buy a Tesla with money currently in Santander 1-2-3 accounts, and than move to a bigger house after 2020 (or leave the UK). But out of interest I had a quick look at re-mortgage rates...1.5% fixed for 2 years with NO product fee. Even a 5 year fixed is only 2.4% with no fee.....IF Santander keeps the 1-2-3 account going at 3%, over 5 years we'll get back £6k. which more than covers the interest rate payments on a 5 year fixed. I've never been a fan of debt, but the way interests rates are now surely it makes no sense to buy a car out right with cash when if your a home owner you can get a loan at 1.5%. Clearly you have to make sure you pay the additional mortgage debt off at any sign of rising interest rates, but as long as your saving are earning your more interest than what your mortgage is costing you, it makes no sense to clear the debt?? It really is a bizarre financial world we are currently living in!! You have five year financial plans? Now that is organised! Quote Link to comment Share on other sites More sharing options...
Ekona Posted March 26, 2016 Share Posted March 26, 2016 I don't even have a five day financial plan 5 Quote Link to comment Share on other sites More sharing options...
Bockaaarck Posted March 26, 2016 Share Posted March 26, 2016 the figures seem reasonable but I would be very wary of any margin calls on debt over the next 5 years. In my view, cash will be King, I'm trying my best to hang on to as much of it as possible. Be very wary regards Santander's ability, within the mortgage contract. To demand immediate settlement of outstanding debt. If you work though the figures, check the paperwork and it adds up in terms of your circumstances, then all well and good. But I would be looking at a lot of other economic indicates before I took on any additional debt. Quote Link to comment Share on other sites More sharing options...
ioneabee Posted March 26, 2016 Share Posted March 26, 2016 cash for my next car is in the 123 bank account - but I'm doing it slightly differently gangzoom I will be getting a loan at 3.2% and leaving my cash in the bank - the loan then actually only costing me .5% at most ........... depending on what santander do over the next few years 1 Quote Link to comment Share on other sites More sharing options...
Dynamic Turtle Posted March 26, 2016 Share Posted March 26, 2016 the figures seem reasonable but I would be very wary of any margin calls on debt over the next 5 years. In my view, cash will be King, I'm trying my best to hang on to as much of it as possible. Be very wary regards Santander's ability, within the mortgage contract. To demand immediate settlement of outstanding debt. Santander calling its mortgages is extremely unlikely, no bank dared attempt this even in the existential crisis that was the GFC. Quote Link to comment Share on other sites More sharing options...
Bockaaarck Posted March 26, 2016 Share Posted March 26, 2016 (edited) Agreed, it is unlikely, but margin calls need to be considered. They only didn't happen due to massive government pressure and subsequent government support of the banking industry. To the tune of £375 Billion between 2009 - 2012. The fact that Santander have also recently restructured and increased the fees of their 123 accounts is also something to be considered. Edited March 26, 2016 by Bockaaarck Quote Link to comment Share on other sites More sharing options...
WINKJ Posted March 26, 2016 Share Posted March 26, 2016 What's a financial plan? Quote Link to comment Share on other sites More sharing options...
Dynamic Turtle Posted March 26, 2016 Share Posted March 26, 2016 Agreed, it is unlikely, but margin calls need to be considered. They only didn't happen due to massive government pressure and subsequent government support of the banking industry. To the tune of £375 Billion between 2009 - 2012. The fact that Santander have also recently restructured and increased the fees of their 123 accounts is also something to be considered. Quite a lot of things have to go very wrong before a bank will call a mortgage, if only because they tend to be the least leveraged loans on a bank's balance sheet; there are riskier corporate credit lines that would be withdrawn first after blowing though a range of insurance / first loss swaps and BoE liquidity windows available to them. It would also be commercial suicide because nobody would ever borrow from them again. Sounds like the 123 account was unsustainably generous? 1 Quote Link to comment Share on other sites More sharing options...
Bockaaarck Posted March 27, 2016 Share Posted March 27, 2016 Agreed, it is unlikely, but margin calls need to be considered. They only didn't happen due to massive government pressure and subsequent government support of the banking industry. To the tune of £375 Billion between 2009 - 2012. The fact that Santander have also recently restructured and increased the fees of their 123 accounts is also something to be considered. Quite a lot of things have to go very wrong before a bank will call a mortgage, if only because they tend to be the least leveraged loans on a bank's balance sheet; there are riskier corporate credit lines that would be withdrawn first after blowing though a range of insurance / first loss swaps and BoE liquidity windows available to them. It would also be commercial suicide because nobody would ever borrow from them again. Sounds like the 123 account was unsustainably generous? Again, agreed, I guess my concerns are the challenges Santander have been having in Brazil and back home in Spain over the last couple of years. Also, I think I've been spending to much time watching the Baltic Dry Index. It's got me a bit paranoid (about everything). In any case gangzoom has clearly had a good work through the figures. If he's happy with the numbers, that's the main thing. Quote Link to comment Share on other sites More sharing options...
gangzoom Posted March 27, 2016 Author Share Posted March 27, 2016 You have five year financial plans? Now that is organised! I'm lucky enough to have a very stable job, with a very predictable income. I simply look at where I want to be in life 5 years down the line, look at costs involved getting there, and if achievable, knuckle down and get on with it. Occasionally things throw you off...I was saving up for a F10 M5, but we all know that's not going to happen Quote Link to comment Share on other sites More sharing options...
gangzoom Posted March 27, 2016 Author Share Posted March 27, 2016 cash for my next car is in the 123 bank account - but I'm doing it slightly differently gangzoom I will be getting a loan at 3.2% and leaving my cash in the bank - the loan then actually only costing me .5% at most ........... depending on what santander do over the next few years I think this is my plan 'B'. I can get 3.3% via Halifax, so happy to pay an extra 0.3% interest for the 'safety' if having cash in the bank. Still the rate at which the £ is deprecating against the $, and the EU vote, might be better off spending the £ whilst it still has some value. 1 Quote Link to comment Share on other sites More sharing options...
Dynamic Turtle Posted March 27, 2016 Share Posted March 27, 2016 Agreed, it is unlikely, but margin calls need to be considered. They only didn't happen due to massive government pressure and subsequent government support of the banking industry. To the tune of £375 Billion between 2009 - 2012. The fact that Santander have also recently restructured and increased the fees of their 123 accounts is also something to be considered. Quite a lot of things have to go very wrong before a bank will call a mortgage, if only because they tend to be the least leveraged loans on a bank's balance sheet; there are riskier corporate credit lines that would be withdrawn first after blowing though a range of insurance / first loss swaps and BoE liquidity windows available to them. It would also be commercial suicide because nobody would ever borrow from them again. Sounds like the 123 account was unsustainably generous? Again, agreed, I guess my concerns are the challenges Santander have been having in Brazil and back home in Spain over the last couple of years. Also, I think I've been spending to much time watching the Baltic Dry Index. It's got me a bit paranoid (about everything). In any case gangzoom has clearly had a good work through the figures. If he's happy with the numbers, that's the main thing. That index will give you grey hairs, best avoided! Quote Link to comment Share on other sites More sharing options...
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