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Mortgages based on LIBOR rate

Hi all,

I'm new to this group and have basically popped in for some advice. I'm not much of a monies person, but the time has come to change my mortgage to get some additional capital for an extension (plans are already in). Currently I am on a interest only payment mortgage with Natwest (It's not that bad a deal actually!) but the fixed rate period is just coming to an end, so swapping now (They have offered me several new options) but really with the poor performances of endowments I want to remove that worry from myself.

Having looked at a few places, Charcol seem to have a good deal which is

2.99% until 30/9/04 then US month 3 Libor rate + 1.25% until 30/9/14 then UK 3 month LIBOR rate plus 1.25% onwards... Sum wise with the current LIBOR Rate (I have looked up quickly on the net to get an idea of the history etc.) this rate seems pretty low over all, peaking to about 6% 6 years ago. The repayments due to the lower rates are what appeal to me the most (well who wouldn't) but obviously there are higher penalty clauses, but I don't see this as a huge issue due to the savings.

Has anyone any experience of this? Am I missing something obvious? Are they good? Avoid? Any information / help is welcome, and I will be talking with Charcol again about this on Monday.

Thanks in advance

Mat

Reply to
Matthew Augier (dps)
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Have you considered that if the to US$ forex rate moved against you by, say, 10%, then your 200K loan has just increased by 20,000? :(

There might even be a compulsory conversion & lock-in clause which means the losses are permanent.

Reply to
Doug Ramage

In message , Doug Ramage writes

If its the deal I think it may be, then it isnt denominated in US Dollars despite tracking their interest rate.

Reply to
john boyle

You could well be right, John. I have not looked at the T&Cs. But if you are, someone must be taking the capital forex risk? No doubt with some highly complex derivatives structure?

Reply to
Doug Ramage

I'll try and talk more to the guy on Monday and find out. But apart form that good or bad?

Thanks.

Mat

Reply to
Matthew Augier (dps)

In message , "Matthew Augier (dps)" writes

Well whether it is denominated in US$ or £ is the key point really. If it IS in £ then it just seems like a marketing gimmick to me.

Reply to
john boyle

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