First national/GE money 2nd mortgage

ddexter2016

My parents took out a 2nd mortgage with GE money in Aug 2004, the loan was variable and theres nothing on the original documents to state how long the variable term was, the loan rate was 9.6% and base rates at the time 4.75% since then the loan rate had only gone up, currently 11.64% how can this be when base rates dropped to 1% in 2009? There are some states from 2016-2019 showing small ups and down do must still be variable, gas anyone any experience with is? Thanks 

davidmcn

"Variable" doesn't mean "tracks base rate" (unless the terms actually say that's what it's meant to do). It just means the lender can change it from time to time, which is obviously what they've done. Not sure what you mean by "how long the variable term was", if it started variable then I presume the variable term is identical to the term of the loan.

ddexter2016

Thanks David, that makes sense, it does say 'any future increase or reduction in your interest rate will be linked to changes in the base lending rate of first national home finance Ltd' I can seem to find anything on this 

Edi81

ddexter2016 said:

Thanks David, that makes sense, it does say 'any future increase or reduction in your interest rate will be linked to changes in the base lending rate of first national home finance Ltd' I can seem to find anything on this 

Base lending rate of First National Home Finance Ltd does not mean the base rate published by Bank of England.

Lenders can make their base lending rate whatever they like.

Can your parents look into remortgaging as part of a first charge to reduce how much they are paying?

Thrugelmir

Secured second charge lending is often expensive. Unfortunately the interest rate charged is a reflection of the overall quality of the loan book, i.e. the level of default incurred. Not a direct reflection of your parents I should add.