US$LIBOR Rate Tracker Mortgage - 2 good 2b true

FD-Celltek

Am looking to remortage and have found a mortgage offered which tracks the us$ LIBOR + 1.99% until 31.10.09.

Not sure what this means but it claims to be running at a current rate of 3.29% and I would guess that it will change as the US interest rates change.

My house is currently valued at £300k and I can get a loan of £250k for £685.42 per month. Which is almost a £100 per month less than I am currently paying on a £150k balance on the virgin one current account mortgage.

The interest rate is calculated daily, the redemption charges are 5% of the advance until 31.10.09 however I would have an option to reduce the capital by 10% pa without penality. It will allow overpayments as either a lump sum or on a monthly basis. It will allow underpayments but only to the level of the overpayments.

It sounds too good to be true. What do you experienced folks think?

Mortgage_Master

Hi,

It all depends on your view over UK & US interest rates.

If think there's been some posts on here before re: US Libor trackers. Could be worth doing a search.

The scheme you're referring to is from Accord Mortgages (subsidiary of YBS). The scheme details can be downloaded here. The sales aide is also worth a look, as it shows some historics on the 3 Months US libor V UK libor. Have a look here also.

The valuation fee will cost you about £375, there's also an arrangement fee of £495 (can be added to loan) & you would be responsible for your own legal fees about £355.

The redemption penalties are high if you need to get out before 10/09. It really depends on your views over the US libor, are you comfortable with it? It's expected to rise, probably after the elections? At the end of the day it's gamble, you need the US libor to average about 2% less than BOE over the 5 years or you could have kept taking UK tracker deals. Just my personal view.

FD-Celltek

Thanks for that. I had a technical problem downloading the pdf's that you included but I managed to get them.

Very useful

Any suggestions as to where I can get advice to form a view on the respective rates? What is your view on the difference between the two?

With regards to UK trackers, what do you feel are the best ones?

lola_rose_4

skipton building society also do a stateside tracker. rate 3.19% - APR 5%

DiggingOut

Discussed here briefly

http://forum.moneysavingexpert.com/cgi-bin/yabb/YaBB.cgi?board=Mortgages;action=display;num=1084402716;start=1#1

also here:
http://forum.moneysavingexpert.com/cgi-bin/yabb/YaBB.cgi?board=Mortgages;action=display;num=1089546151;start=0#0

more substantially here:
http://forum.moneysavingexpert.com/cgi-bin/yabb/YaBB.cgi?board=Mortgages;action=display;num=1082925826

May be a few others, try the search facility, it really isn't too bad. It defaults to postings in the last 7 days, which isn't much use for something like this, but you can limit it to mortgage board and search for LIBOR -- there may be others besides the ones I found.