Another Northern Rock Situation (any Advice Please)

robo1837

Hi this is my first time submitting my situation on the site so I hope i'm doing everything right!!

I am another one of the Northern Rock 'Together' mortgage customers. We borrowed a 125% mortgage, it seemed so great at the time now were just kicking ourselves.

We bought our house in April 07 for £117500 plus the full 25% on top therefore our mortgage is currently around £112000 (95% secured) and also Unsecured loan of around £30000 we also took the £700 help with fees aswell (silly I know.) Our current fixed rate of 6.49% ends in Feb 09 so I am now starting to worry about what to do when we get there. We have been on a repayment mortgege.

My current monthly payment is £857 (£671 on mortgage and £186 on loan) when my fixed rate ends my payments will go up about an extra £100 or so working on Northern rocks current SVR of 7.49%, this will massivly push our budget but with a few cut backs we should be able to afford it.

My current salary is £28000 and my wife earns £18000 per year so not bad wages but then £550 per month goes on child care.

As mentioned earlier we bought the house for £117500 and spent about £15000 doing it up, the rest of the loan went to pay off exising debts. We have recently had the house valued by 4 different estate agents and the valuations ranged from £125000 - £140000 so weve taken a true value of £130000 given the current market, there are also two houses very similar up for sale at this price.

Givin all the information I am thinking about remortgaging for £125000 and taking out an unsecured loan for the rest, £17000, over say about 7 years therfore clearing this loan in 7 years. I have worked out the payments for the two will add up to about £1000 per month, which is what I will be paying northern rock if I stay with them. The £700 HWF souldn't be a problem as my wife gets a bonus in March which will cover this.

Is this the right thing to do?
Will we get a mortgage and loan for this amount on our wages?

Any advice would be great as we want to do the right thing.

_Andy_

If you think the true value is £130k (and from the figures provided I'd be thinking a surveyor would say less), you wouldn't be able to remortgage for £125k as it's more than 95% of the home's value.

Ian_Griffiths_Halifax

See what you can remortgage for to get rid of the Together Mortgage, but keep the Unsecured Loan with Northern Rock (get a figure from them to find out how much the payments will be as some of their loans go to SVR + I think 5%). While it's not ideal to keep the Unsecured loan element over the longer period i.e. the original mortgage term, you can overpay by as much as you want without penalty but your contractural monthly payment would be much lower over the 23 year term (assuming originally a 25 year term) than if you took a lower rate unsecured loan over 7 years.

If you're not thinking of moving for the next 3-5 years I'd even consider taking the new remortgage on an Interest Only basis to be able to overpay by as much as possible on the Unsecured Loan.

robo1837

Thanks for your replies. The rate of the loan will go up to about 15%apr therfore a huge amount on what i'm paying now and it's over 35 years. I didn't know I can over pay and get rid of it faster

sazziecee

I am with Northern Rock and had a look at their mortgage offers available on their site.
Then when I looked at the existing customers section of the site, it said something like "sorry we cannot offer new mortgages at this time, please see an independent financial adviser"
So it appears that they are only accepting new customers and not allowing existing ones to remortgage?? Have you asked NR?
My deal isn't up for another year though so I am just going to wait and see what happens.

HelpWhereIcan

You may be better remortgaging for 90% than 95% as you will have a better choice of lenders leading to a better deal and lower fees than available at 95%.

You would then need to make the decision whether to leave the remaining £25000 with Northern Rock at 13% over 35 years or re-broke it to another lender but accept a term restricted to 7 years.

Depends on figures involved, but a mortgage broker should be able to do the figures for you.

If you want to DIY, have a look at http://www.moneyfacts.co.uk/searches/mortgage.aspx and http://www.moneyfacts.co.uk/searches/loan.aspx to get an idea of what may be available and to play with the figures to see how it would work out.

Use an online calculator to work out the payment on the Northern Rock unsecured section assuming you leave it with them at 13% over its existing term eg over 35 years, 25k @ 13% would be approx £273.80 pm.

If you are not confident in making the choice yourself, need further advice or want someone to take the hassle away from you get some advice from a whole of market broker.

Ideally use personal reccomendations to pick one or even something like the Yellow pages etc. No harm in speaking to more than one and always make sure to ask the questions Martin suggests in http://www.moneysavingexpert.com/cgi...66,86816#step2.

Be careful of anyone who approaches you unsolicited and use the services of a face to face adviser unless you are confident enough to deal with someone via post & email.

Hope this helps

Good Luck

AGWF1963

Keeping the unsecured mortgage is bad advice. I did this in October 2005 having taken an unsecured loan of £8850 (and a £35,150 secured mortgage) in November 2003.
I started off paying £55 per month, this went up to almost almost £100 per month after I repaid the secured loan element. I have now paid Northern Rock £4200 but my debt has only gone down to £8610(i.e. by £240) after nearly 5 years! A whopping £3940 of interest charged already and there is still 243 months to go.
There is no way out and they refused to convert me to a standard personal loan 2 years ago to clear it.
If at all possible - do not keep the unsecured loan - it ia a license for NR to print money - your hard earned money.

UK007BullDog

AGWF1963

Sorry to hear about your problem. But yours is different to the original poster.

Anyway I think you should also see a whole of market broker to help you get out of that debt spiral. or talk to the CAB!

AGWF1963

I was just flagging up to the poster that by clearing the together mortgage whilst keeping the unsecured loan with NR they are going to have to wait a long long time before they repay any capital on the loan - at an extorionate interest rate. Therefore there is an association in what I am saying.I am not in a debt spiral that requires me to seek help from the CAB (or anyone else for that matter). This is the only debt I have and I am considering alternatives at the moment towards clearing it (it would actually be cheaper on a creit card - not that I'm considering this).