Hi All,

I got an offer from Jakub Krol at Noble as follows:

- we will set this monthly installment for 2 years

- your total interest will be set at 1% for 2 years ( that includes Banks margin plus LIBOR)

- all the excessive parts ( your interest of 1% and your original Banks margin+ LIBOR + 2,25% ) are added up to the capital after 2 years , it will not make a big difference to the capital balance but it will secure your cash flow

- Early redemption fees during two years of product are 4,50% in first year and 2,25% in second year

- Bank fee for this offer is 0%

- the maximum rate will be calculated at CHF/PLN 2,50 (sell rate); to compare today it’s 2,9484

It seems good in principle - set interest rates low and add the excess on at the end with no fee. The only bit I'm puzzled about is the 'all the excessive parts' line - I don't understand what the 1% and 2.25% items are - are these added on as extras?

I don't have my mortgage details to hand, but thought that it operated on a principal of libor + bank margin to give the total rate.

Anyone else got any thoughts on this?

N

Hi Neil

The 'fee' is 4.5% charged as 2.25% each year as an additional margin on the payable interest rate used for calculating the deferred amounts. If you are in a negative cashflow position with your Polish properties (very likely !) it seems a good idea to reduce/eliminate the negative cashflow now for 2 years.

After 2 years (I hope) the Polish property market will be on the move again and the global recession should be gone or atleast on it's way out. For me it is a question of surviving the next 2 years and this helps !

HTH Antony.

and just to clarify the interest rate etc...

This is for CHF loans, you pay using the interest rate of 1% now each month for 2 years. The amount you would normally have payed each month (plus the fee) is calculated each month and stored 'in memory', after 2 years this stored amount is added to your loan balance and your previous conditions prevail.

For example if your current rate is Libor plus 2.95% the stored amount will be calculated as:

0.52% ( current Libor rate) + 2.95% (your margin) + 2.25% (mini % offer fee) + 1% (until your mortgage is written in the mortgage register etc - I have included this as in my experience it takes 1-2 years to get this loading taken off so you probably have it) - 1% (the amount you are paying each month).

so in this example the total rate is 6.72% - 1% (you pay) = 5.72% deferred and added to loan after 2 years.

Antony

Hi Antony,

Your answers are very useful, thanks...

So it seems that this is essentially the same as a previous offer made by Noble, but under a different guise, rather than charging an outright fee it's built in to the repayment deferrals.

I'm a little disappointed at the 'lack of clarity' - the offer clearly states that the bank fee is 0% but the 2.25% is inserted in the example calculation.

I also understand what the extra 1% is for.

I think my original reasoning on not to take this offer still stands, in that the 'fees', whatever way they're put, still add up to around £5k stg to drop the cashflow down.

Do you have a particular reason for taking the offer out of interest, is it a cashflow issue?

Thanks...Neil

Hi Neil

On first glance I also thought that this offer and the previous one (fixing the CHF/PLN exchange rate at max 2.5) where too expensive costing around 5% of the loan value.

There are some other issues that can turn the deal into an attractive proposition, I have taken these deals now on my 8 Noble bank Polish mortgages, you can find me on google and contact me directly where I can give you some further details about this....

HTH Antony Tilney

It is an extremely good offer... I have just been offered a PLN mortgage at an extortionate 9.99% with Metro. It has taken me 8 months to find this. I have no option at the moment other than to go ahead with it, due to the need to complete and then move to another product at a later stage.

In terms of the CHF vs PLN mortgage. What would individuals advice is the best one to take out at the moment?

Thanks,

STC

Antony - thanks, I might give you a shout in the next day or so...

N

Hi STC,

My concern about the offer is the 'building in' of an effective 4.5% fee just to defer payments. This is a lot, even for one property.

Am I missing some other factor, apart from the general interest rate?

N

Neil,

One point that may be worth checking (you may have done this already) is whether you are fixed into any insurance deal. My broker said that the 'insurance coverage is 3.4%'. I am still checking out this detail but some lenders try and push this into the offer as conditional.

Thanks

STC