US LIBOR linked morgage ?

I have recently remortgaged, using a Leeds & Holbeck product which tracks the three-monthly US LIBOR rate. The mortgage starts with a 'low' fixed rate until September and then resorts to a percentage figure above the LIBOR rate (can't put my hand on the figure at the moment).

I got a letter from the Leeds and Holbeck today informing me that the period of my 'special scheme' was coming to an end. Instead of the 'special deal' of £478 a month (for an £80,000 loan) I would have to pay £473.70 from 1st October since the rate reverts to the normal interest rate, currently 2.85%. They added 'I do hope the preferential rate was of benefit to you'. Yeah, paying them an extra 5 quid a month was very helpful to me!

US LIBOR based mortgages seem attractive but usually involve a penalty payment if you pay the loan off early so you are, to some extent, locked in.

At the end of the day, who knows how rates will go. If we knew the answer we would all know exactly which product to buy. I took the risk - as you say, the US LIBOR rate has tended to be lower than the Bank of England rate. At the moment I am saving quite a bit each month, but I am quite prepared for the rates to exceed the UK rates at some point - the world is a rather volatile place at the moment.

I wouldn't buy into a product which was in US Dollars, though - the exchange rates could easily wipe out any advantage at the drop of a hat.

There are plenty more knowledgeable people in this group who could help - but having scoured Google Groups for help myself, the rather sneering response seemed to be along the lines of 'if you have to ask you shouldn't buy the product' ;-)

Hope these ramblings are of some use. At least you are hearing from someone who has bitten the bullet and gone along the path you are interested in!

Agreed. That is the downside.

Sad, but true.

Agreed. The one I'm looking at is in Sterling though.

Yeah - I see what you mean.

Thanks, you've been very helpful indeed.