What are Hedging solutions?

With hedging for portfolio re-mortgages, they are most common with larger facilities which usually include portfolio mortgages. We see this as an option for savvy property investors that look at all options which include fixed rates, swaps or caps, these are usually the three options that you have when hedging your interest rates.

hen securing a portfolio re-mortgage with a bank, you typically have the option to choose between variable interest rates, fixed interest rates, or a combination of both.

For loans with variable interest rates, like those tied to the Base Rate or LIBOR, you might consider hedging products such as interest rate swaps or caps. These financial instruments offer protection against increasing interest rates. Each hedging product has unique features, and we can refer you to a third party company to provide alternative options with a detailed explanation of the associated risks and benefits.

Fixed interest rates, commonly known as Fixed Rate Loans, also carry certain risks. Similar to the previously mentioned hedging products, it is crucial to secure these rates at favourable market conditions.

The hedging process usually starts with your bank presenting various hedging options, including swaps, caps, and Fixed Rate Loans, on a non-advisory basis. You will need to evaluate these options and select the hedging product that best fits your needs. The final step typically involves a live recorded call to lock in your chosen hedge at the current rate or premium.

Mortgage Lane are not able to give advice on hedging, but we may refer you to a suitable specialist that is able to assist you. We recommend you seek advice from relevant professionals when considering interest rate hedging against your portfolio re-mortgage.

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