#220446
Emerpus

I pretty much agree with ABD’s answer to your first question. A bond quote of 97 is generally considered pretty good but whether an initial 3% loss will be a problem depends on 2 things. How long you plan on keeping the loan and whether interest rates go up or down. If you keep the loan for a very long time it will not matter much. If rates go up it will not matter at all. In that case the bond price will go lower and you can buy back the bonds cheaply in order to repay you loan early. You could actually make a neat tax free profit that way should you be so lucky.
So, you only actually risk losing the 3% if you have to repay the loan early and interest rates have dropped further (in which case you can always repay at rate 100) by that time. If you think there’s a high probability of that situation you might want to consider alternatives.

Second question:
Variable rate loans like F5 CAN be more expensive to repay early during the 5 year period but not necessarily. Again, it depends on the development in interest rates. If rates rise, bond quotes drop and vice versa. The difference is that you only have the option to repay at rate 100 by the time the loan is being refinanced (for F5 that means every 5 years). If you want to make an early repayment during the 5 year period you will always have to pay the market price for the bonds which may be above 100 if interest rates are low. Commission when buying the back the bonds will also add a bit to the total costs involved. However, if rates go up, bond prices are lower and you’re all good.
It might be worth noting that since the F5 bonds expire much sooner than a fixed rate bond loan (in 5 years instead of in up to 30 years) a given rise in interest rates will cause a smaller drop in bond price in comparison so don’t expect the same potential profit when repaying an F5 early if rates go up moderately (and depending on circumstances you might also have to pay some tax if you make a profit buying back the bonds behind a variable rate loan like F5 but that’s another story).

Personally I don’t think there is anything wrong with F5 and I generally like it better than F-kort but they both have pros and cons so it naturally depends on what’s most important to you. F5 offers a higher degree of safety but less flexibility in the event that interest rates stay at current levels or lower. If maximum flexibility is what you’re after you might also want to look into “prioritetslån”/”boligkredit” types of loans as a part of the package as an alternative to F-kort.