Many homeowners have financed their home with fixed-rate 2% mortgages, and it is optimal if you wait for a rise in interest rates so that you can convert the loan with a rate gain. When interest rates start to rise, we can only guess. For the time being, it continues to decline.
It is because of e.g. that there is no prospect of increasing growth in Europe and uncertainty elsewhere makes investing in Danish mortgage bonds attractive, and then interest rates fall.
But you can still do something to trim your home financing without taking on a big risk. You can do this by using the Real Council model. Here are 2 options:
You have a 2% loan with no installment
Here you pay an extra contribution for the freedom of interest. The difference between the highest contribution rate and the contribution rate in Good Finance can be up to 0.42%. If the 2% loan is raised after 1.4.2017, the rate is approx. 1.4 points lower than on the loan we use for the Real Council model, so a restructuring will yield a small exchange rate gain.
If your current interest-free loan is $ 3 million, the loan can be rescheduled at very low cost.
You save up to approx. USD 13,000 in interest and contributions in the first year. You have a 2% loan with installments: Here, you do not pay extra contributions for interest-only payments, but you can still use the Real Council model to save. The Real Council model is not only cheap interest-free. It also provides flexible repayments. This means that you can convert your 30-year 2% loan into a 20-year 1.5% loan, but pay the same installment as on a 30-year loan. If the loan is 3 million, you can save up to approx. USD 12,500 in interest.
But there is a downside, using 20-year loans
And that is, the gain on later conversions at higher interest rates will be lower. Where the price drops by approx. 7 points on a 30-year loan, the rate “only” drops by approx. 5 points on a 20-year bond. In kroner this means a difference of approx. USD 60,000 if the debt is USD 3 million
On top of that, a larger installment is paid on the 20-year loan, which is financed with a mortgage loan where you can not get a capital gain later.
The repayment on a 20-year loan is approx. USD 43,000 in the first year million instead of approx. USD 24,000 on a 30-year loan. So you miss a potential price gain of approx. USD 1,400 per year you have the 20 year loan.
If you want to save current interest rates, you must accept a smaller exchange rate gain if the interest rate rises later.
You can also use the Good Finance model for interest-only payments on the basis of a 20-year 1.5% loan. Here, the interest and contribution savings are up to approx. USD 27,000 in the first year if the debt is USD 3 million.