LIBOR stands for London Interbank Offered Rate.
It is the level of interest that banks use when lending to each other and LIBOR is set every day in London by the British Bankers Association.
Whilst LIBOR is set daily, there are different rates for different maturing periods from next day (known as the overnight rate) to a loan period of 6 distant. Each rate is set daily. On top of this, there are 15 different currencies in which monies lent are subject to LIBOR including the main economies such as USA, Euro, The Pound Sterling, etc.
A LIBOR mortgage is usually set to the 6 month LIBOR rate and an additional % rate will be added to this LIBOR rate. This is generally the rate the borrower would pay.
For example, if you wanted to calculate your LIBOR rate you first need to establish which rate you are borrowing on. In the UK, for mortgages, this might be the 6 month Sterling LIBOR. Your mortgage might state that you will be paying a low rate of say 2.15% and that after 18 months it will revert to 2% above LIBOR. Therefore, at the end of the fixed rate period, if LIBOR on that day for your loan currency is say 1.035, then you would be charged interest at a new rate of 3.035 (2% + 1.035%).
LIBOR is the rate at which banks lend to each other and is only usually used for mortgages which involve an element of business lending. Of course, this is all dependent on the rate used for your loan and the terms of your loan. Therefore, it’s wise to take advice before entering into a new loan.
Contact Mortgage Required to speak to a mortgage adviser on 01628 507477.
Related articles:
Download our Free First Time Buyers Guide
Recent posts
The Equity Release Council has revealed that three in five UK homeowners are interested in releasing money from their property later in life.
Prices for UK houses drop in July 2024
7 days ago
The average seller’s asking price dropped by 0.4% in July, a bigger drop than we have typically seen.
We explore the differences between Millennials and Gen Z and what both generations ideally want from a new home.
Overpaying mortgage vs money into savings
18 Jun 2024
Should you overpay your mortgage? If you can put extra cash away you need to seriously consider whether you should pay more off on your mortgage or put it into a savings account.
Buying a property, especially in the current climate, is a big decision for first time buyers. We have listed a few tips that can help you buy your first propertyy
Does the time of year make a difference in house purchases? The answer is, yes and no.
The popularity of buying a house can vary depending on various factors such as regional trends, how the economy looks, and of course personal circumstances.
6 Garden Tips to Add Value to Your Property
30 Apr 2024
If you are looking at putting your house on the market, you may want to consider giving your garden some TLC. Small changes can make your outside space a lot more attractive to potential buyers resulting in a faster sale.
Averages for a first time buyer in the UK
24 Apr 2024
Getting on the property ladder is a big milestone in life, and is not something to take lightly. There are several things to take into consideration such as saving up for a deposit, finding your dream home, and finding the best mortgage product to suit you. Here we look at UK first time buyer statistics.
More information
Trusted by
