LIBOR & Mortgage what next

mad_angler1

Hi everyone, i had a mortgage for £112,000 with Platform Home loans that i took out in 2007 when i was self employed running my own business, we took a fixed at 6.2% for the first 3 years then we are now variable at 2.2% above LIBOR so are paying roughly 3.2%, in 2011 i lost the business due to the recession and had to enter an IVA to deal with the debt, i was very lucky as i walked straight into a job and have been there ever since.

Since the whole banks screwing every one over and the government looking to make changes in how LIBOR is set I'm getting very concerned on how this will affect the rate, i could no longer afford to pay it at 6.2% again due to lower wages and the IVA if it started to increase.

Unfortunately due to my circumstances and the house being worth less than what i have left on the mortgage i can't change.

What do we think is going to happen with regards to LIBOR? personally i think the lenders should be forced to move any personal mortgages over to bank of England rate to start with but thats never going to happen.

im beginning to get very concerned as the government stick there feet in

dunstonh

Rates are at all time lows. Expected to remain low for a few more years but there is only one path they are going to take and that is up.

LIBOR was mostly manipulated to be lower but the differences were small.

im beginning to get very concerned as the government stick there feet in

Feet in where?

Thrugelmir

mad_angler1 wrote: »

What do we think is going to happen with regards to LIBOR? personally i think the lenders should be forced to move any personal mortgages over to bank of England rate to start with but thats never going to happen.

That impacts lenders commerciality. So yes move to BOE base. However that may result in a higher margin above.

jamesd

Bank Rate and LIBOR will both inevitably increase so that you do end up paying 6.2% or more again at some point. Not for a year or two or more, but eventually. An increase to 6.2% from 3.2% would increase your monthly payment by £280.

Your insolvency practitioner may need to work with you to adjust the payment level if your circumstances change due to higher mortgage costs. Just what happens, it won't surprise anyone involved. By the time it does happen your income may have increased anyway to the point where you can continue to afford the same payment amount. 3% pay increase for two years would mean you'd need to be on £55,172 now to cover the increase (ignoring the effect of higher rate tax thresholds). Same over three years would mean you'd need to be on £36,235 now to cover it. If it lasts for four years, £26,711 now. Time for pay rises to happen is definitely your friend here, making everything easier.