LIBOR vs SONIA

Fairyeggs

Hey all, I give you a bit of background as it might make the answer different.

Brought the 1 bedroom Just before the market crash with ex. few years later Expecting a child. Could not afford to sell and buy a bigger place (We took 100% Mortgage just before the crash). Took a 30k Loan built an extension as our garden come with a 980 years lease to the flat. Was a big garden and waste of space for a small flat. Somehow the freeholder (Flats owners inc ourselves) agreed if we paid the legal fees for it to be done. So, as we took the loan out. It’s the only way we could and to pay it back over 7 years is to switch to interest only, then switch back to repayment when loan paid off.

Few Years ago we separated. I stayed in the martial home with our girl she went off. I’m paying for it all. To be honest it £300 a month. Rent here for the property is £900.

I got a letter today from the mortgage company offering us agree to the switch from LIBOR to SONIA. I tried to read up about it. Not very good at understanding all this. We 14 Years left on the mortgage; I defo won’t be switching back to repayment as she will gain more for nothing. I’m Happy to stay here and she also in IVA so if I want to sell, I would have to spend what I been quoted 3 times 15k +.  I don’t have this money as a single dad. She got 3 years of IVA left so she would sell then as she gets whatever she entitled to then and not her creditors... We are divorce, no clean break order as she could not afford it and I could not find the money to force that.

So, my Question is, should I agree to this. Would it make much different? What the e pros and cons.

She would agree to whatever I chose to do and sign it. We get on well. but she money motivated sadly.

Thanks for taking your time to read this.

Edi81

LIBOR is an interest rate that banks need to stop using. 

SONIA is the new rate. 

You must be paying an amount of LIBOR plus XX - is the XX changing? If not, then you are probably going to be better off as SONIA is about 0.16% versus Libor at around 0.30%. 

Fairyeggs

Yes think so by 2% almost. i know when it was 5% we were on fixed rate paying 840 a month on a 125k mortage, is there any disadvantage if i switch