Secured loan interest advice

misterpe

I'm sure this question has been asked before but urgently need some advice. I pulled out a second mortgage four years ago. The variable rate linked to one month LIBOR. Early on in the mortgage there were two hikes in the re-payments (reason given-due to rise in LIBOR).
In the last year or so there has been a sharp decrease in the LIBOR rate but no movement on my re-payments, would this be seen as "unfair" on the Lenders part, were do i stand ?

opinions4u

What, precisely, does your agreement say will happen to interest rates?

Who is the lender?

Have you asked them for an explanation and, if you have, what did they say?

Thrugelmir

There may be a collar on your mortgage. So at a given point you have no longer benefited fron the fall in LIBOR rates.

misterpe

The wording on the contract is " your agreement has a variable interest rate, that means it is linked to one month LIBOR"

TrickyDicky101

You need to scrutinize the document and see if there is any mention of a collar (as Thrugelmir stated) or perhaps a minimum interest rate that will be applied to your balance (which is the same thing). Do you have a mortgage statement showing you what repayments you have made and what proportion of these is interest and capital? It might help determine if you really are being denied the benefits of the lower interest.

misterpe

Thanks for this, i have checked through contract no mention of a "collar"

there is no mention of a interest rate in the document. It sets out the loan ammount and the monthly payment. Further to the detail given previous there is a further clause to say

4. We may vary the effective rate on this agreement in line with movement in 1 month LIBOR.

Thrugelmir

Who is your lender?

misterpe

fUNDING COPORATION

TrickyDicky101

misterpe wrote: »

4. We may vary the effective rate on this agreement in line with movement in 1 month LIBOR.

I'm no lawyer, but that doesn't categorically state that they will vary the rate with 1 month Libor, just that they may. I suppose that might allow them to vary it only on their terms (ie upwards).

misterpe

Yes your probably right, two raises up seems so unfair without any consideration to reduce given current rates.