Why on earth would the bank manager want faster repayments when rates go up?
(I don't intend to put myself in a position where the bank manager can call the shots.)
It's not improvements I've borrowed for...only freehold.
And the property I've invested in, where it's incorporated into the overall farm business, isn't earning stuff all.
None of my farming operations do.
It's all about long term security against return on capital.
While rates are so low, I might as well leave the mortgage running slow.
Any surplus cash mightn't be earning anything where it sits (roughly a 1.5% difference twixt what cash earns, and what the outstanding mortgage is costing), and the flexibility it offers is a lot handier than that 1.5%.
Fodder could go up or down, or I could go down with TB tomorrow.....who knows when the cashflow table turns
I could decide to plough a packet into the mill business - if the telehandler and the main breakdown mill both had terminal crises, the mill account would be in a pretty poor state.
I might see a purchase I simply had to have!
Re-arranging finance costs, and I suspect I'd be unlikely to get the very low rate on the mortgage again now, esp when it would obviously be for the want of cash.
I can foresee a time when subs have gone, bank rates go up, and the overall economy is in the doldrums.
I hope I have the nadgers to act fairly abruptly to shorten my lines of communication in such instance.
I am old enough to remember, as do other contributors from Pembrokeshire, that when milk quotas
came in in 1984, Barclays bank did a 180 degree turn, overnight, on the dairy industry, forcing many
to sell up to try and meet their loans. Furthermore, over the last 12 months stories are coming to the
surface about another bank, RBS, who handed some of their in-debted customers over to a subsidiary,
who proceeded, to basically, fleece them. It has also just come back to my mind about the early 90's
when interest went suddenly higher and people who had just taken out mortgages found themselves
in negative equity, handed the keys to their houses back to the mortgage holders - but - if the sale
of the property wasn't sufficient to cover the debt, the mortgage holders still hounded the now
homeless, ex-property owners.
Banks do not exist to keep you in business - their main priority is to make money for their
shareholders and depositors - anyone who thinks otherwise......