Interest rate swaps made easy
Published: 28/03/2013
Transcript
All abroad…Your business sets sail.
Things are looking good, the waters are calm and you’ve got the wind in your sails. So you decide:
- You want to expand
- You want to diversify
- You want security
You decide to push the boat out and take out a business loan.
Danger! Rising interest rates! Better batten down the hatches.
The danger of rising interest rates could halt your progress and could even sink your ship entirely.
Help seems to be at hand…
Here you go… here is a business loan. All you have to do is take this swap as part of the deal. Don’t worry – the swap will protect you if interest rates rise. That’ll help you steer around those nasty looking risks ahead.
But just like an iceberg, there’s more to interest rate swaps than meets the eye.
The true depth…
Mr Lender did not fully explain what would happen if interest rates fell. You weren’t made fully aware of the huge exit fees – often 50% of the full loan. Mr Lender can also terminate the policy at any time without charge.
The winds turned…
Interest rates dropped from 5.75% to 0.5%. Not only do you not see the benefits of the drop, you are now liable for the cost of the swap. You can’t even walk the plank – exit fees of up to 50% won’t let you past.
Caught between the devil and the deep blue sea…
Not only did the lenders fail to explain the full financial implications of the product since the Libor rigging scandal broke, it was revealed that Mr Lender sold the product on the pretext of a rising market when they were fully aware that interest rates would soon drop.
The result: Your business is left at sea and you’re stuck on board
You’re left with crippling repayments – even if the loan is paid off. No hope of escaping the swap. This voyage has led to many businesses going under.
What should I do? Call for help of course!
Goldsmith Williams is dedicated to helping all SMEs affected by interest rate swaps mis selling. As an established law firm, we are well practised in dealing with lenders and securing financial redress.
Throwing you an additional lifeline
We understand the devastating impact of interest rate swaps. That’s why we will act to have your fees frozen while your case is under review.
Let’s talk about your voyage. We’ll help bail you out.
Content correct at time of publication