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Not everyone who has been sold an Interest Rate Hedging Product knows that they hold one as many people think they just have a fixed rate loan or variable rate loan.
When you purchased the Interest Rate Hedging Product you may have been under the impression that you were purchasing a type of fixed rate or variable rate loan. However there are some fundamental differences.
You may have entered into an Interest Rate Hedging Product if any of the following apply:
• There are two separate products;
• As the loan and the Interest Rate Hedging Product are separate they may be different terms and for different amounts;
• There may be multiple cash flows on the loan for each Interest Rate Hedging Product;
• There may be unexplained termination or breakage costs. The breakage cost is typically much higher than for a fixed rate loan;
• The Interest Rate Hedging Product may not be amortising, this means that although the loan may be reducing with each payment, the Interest Rate Hedging Product notional may remain the same.
You can check with your bank, accountant or specialist in this field such as Seneca if there is any doubt. You can also check with your bank by asking for a “Confirmation”, which is a document confirming the basic detail of the Interest Rate Hedging Product.
If you wish to check whether you have entered into, or been entered into, an Interest Rate Hedging Product then please do not hesitate to contact us on the form below.
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