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A comment on Danish bank launches negative interest rate mortgage. Parent comment

Re:Danish bank launches negative interest rate mortgage by Phillipharryt on Thursday August 15, 2019 @01:43AM (#20702895)
I can't find all the fine details on this loan, but there are definitely loans that stop you from prepayment, or at least have a penalty associated with them. These penalties can be pretty large and definitely are a reason not to pay back the entire mortgage before 10 years. In this exceptional case I'm assuming there is a prepayment penalty for a large portion of that 10 year fixed rate period.
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Re:Danish bank launches negative interest rate mortgage by kgwgk on Thursday August 15, 2019 @07:45AM (#20704282)
The discussion is about 10-year fixed rates. After 10 years you can either refinance or pay (and it’s not an anticipated payment), or maybe it’s already stipulated that the rate after 10-years is floating (but then cancellation is also much easier than in the middle of a fixed-rate mortgage).
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Re:Danish bank launches negative interest rate mortgage by systemtest on Thursday August 15, 2019 @03:51AM (#20703391)
Those prepayment fines are basically what the bank is losing out on you. If you have a 3% mortgage and the current rate is 2%, then the bank would lose out 1% for the current mortgage period. That's the penalty.
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Re:Danish bank launches negative interest rate mortgage by Phillipharryt on Thursday August 15, 2019 @06:29AM (#20704000)
That is not how the penalties are worded at all. Penalties are usually in the form of a percentage of a number of months' interest. I understand the fine is because the bank makes money on loans by being able to rely on them being a fixed long term, and the cancellation affects that, but it's not just the bank passing on that percentage loss directly.
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Re:Danish bank launches negative interest rate mortgage by systemtest on Thursday August 15, 2019 @09:42AM (#20705092)
Perhaps it's a country thing. Here in the Netherlands that is how the banks calculate the prepayment fine. You are allowed to pay off 10% to 20% of the original sum per year but over that amount you pay a "boeterente" (interest-fine). It's equal to the amount of money the bank loses by loaning your money to someone else over the remainder of the fixed period (10/20/30 years).
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Re:Danish bank launches negative interest rate mortgage by Dylan16807 on Thursday August 15, 2019 @04:10AM (#20703452)
It's pretty ridiculous if the penalty isn't specified by the contract...

Whatever new rate you might get is not the business of your previous loan holder.

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Re:Danish bank launches negative interest rate mortgage by systemtest on Thursday August 15, 2019 @04:23AM (#20703504)
They are specified in the contract. If you sign the mortgage contract you are giving the bank steady business for the next 10 years in return of a lower rate. By breaking that 10 year agreement the bank loses money which they will charge you for.
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Re:Danish bank launches negative interest rate mortgage by Dylan16807 on Thursday August 15, 2019 @10:21AM (#20705438)
If the early payment penalty is based on the current rate, then it's not what I mean when I say "specified by the contract".
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Re:Danish bank launches negative interest rate mortgage by kgwgk on Thursday August 15, 2019 @08:01AM (#20704383)
It all depends on the contract. You can get a not-so-low rate that gives you the option of prepayment (with some fixed penalty).
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Re:Danish bank launches negative interest rate mortgage by adamlett on Thursday August 15, 2019 @05:25AM (#20703768)
I should have been more clear in my comment. What I meant was: There is no requirement that the maturity of a mortgage should be 30 years exactly.
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