Mortgages Section

Use This Mortgage To Make Free Money Over 15 Years - It's A Great Trick

April 2006

This trick looks like a real winner for those savvy enough to take it up. But hurry up and do your research because we wouldn't be surprised if the Northern Rock try and close the loophole.

A Clever Way To Use 15 Year Fixed Mortgage Deal At 4.99%

• The Northern Rock Building Society is offering a 15 year fixed mortgage deal at 4.99%
• What makes the deal so attractive is the mortgage is very flexible
• For example, you can borrow and pay pack any part of it (up to the mortgage amount) at anytime
• So if you have no mortgage or can borrow more on your house then do so and immediately repay the amount keeping a small mortgage balance of £100
• Let's say you borrow £100,000, repay it which means you'll have put in place a borrowing facility of £100k for 15 years at 4.99%
• Assume that interest rates stay low for the next 15 years then there would be no point in using the facility
• But imagine if interest rates move to 7% or perhaps even 10% then you can borrow £100,000 place the money in a high interest rate savings account and earn the difference in pure profit
• In effect you'd be borrowing at 4.99% and lending at say 8% so making £3,000 a year in risk free money

Summary

It pays to keep abreast of the Personal Finance world because juicy products sometimes come along. But these for obvious reasons are not heavily marketed or promoted.

On paper this Northern Rock deal looks like a real winner but as ever make sure you do some further research with the main emphasis being on exactly what fees are charged because that may be the sticking point.

See Also

• Northern Rock Mortgages
• Find's Mortgage Lender links