Loan - Northern Bank

blondie21

*****THIS IS SPECIFIC TO NORTHERN IRELAND AS NORTHERN BANK ONLY EXISTS IN NORTHERN IRELAND.******
I recently ( last month ) took out a loan with the Northern Bank. It says on the statement " variable rate Personal loan " , it was described as a rate for homeowners...
I Was told that Variable means the rate goes down as the bank rate goes down as opposed to a fixed rate loan.
can anyone advise me before i get on to the bank and read them the riot act as my payments are still the same as when i took the loan out.

BigAl94

Variable simply means that it is not fixed and the rate can be increased or decreased as the Northern see fit. It is secured on your house and there is no guarantee that it will track base rate. At a time when all banks are reducing the amount they lend and seeking to increase their margins, be thankful you are not paying more!

dmxdave

The banks (funny enough) take their time in passing on the reduction, also might be worth reading the T&C's in case there is a clause on how low their interest rate goes no matter how low the base rate goes. Not set in stone just my thoughts.

thriftyminx13

If your loan was only taken out last month then the BoEngland only reduced
interest rates last week. If the bank passes it on you'll be notified but not until the end of the month.

Also banks now are reluctant to pass on any further reductions in base rate due to the lack of business sense for them.

It's a case of wait and see if they pass it on. I don't think any banks have announced if they will be passing on the rates.

It follows the same for tracker mortgages that most banks have a "capped" lower rate otherwise they'd have to start paying us.

blondie21

BigAl94 wrote: »

Variable simply means that it is not fixed and the rate can be increased or decreased as the Northern see fit. It is secured on your house and there is no guarantee that it will track base rate. At a time when all banks are reducing the amount they lend and seeking to increase their margins, be thankful you are not paying more!

It is definitely not a secured loan, as i would never take a loan using my house as security.
This was a special rate as i was a valued customer. as opposed to a fixed rate personal loan which was 9.9% at the time ( mid december )

thriftyminx13

blondie21 wrote: »

It is definitely not a secured loan, as i would never take a loan using my house as security.
This was a special rate as i was a valued customer. as opposed to a fixed rate personal loan which was 9.9% at the time ( mid december )

If the loan was only taken mid december then i wouldn't expect your rate to be lower just yet for reasons above. If you're not happy phone them and ask them to explain. It's a local call cost from what I remember.

niceday999

hello
i too have a loan with the northern.....i must ring them tomorrow

BigAl94

blondie21 wrote: »

It is definitely not a secured loan, as i would never take a loan using my house as security.
This was a special rate as i was a valued customer. as opposed to a fixed rate personal loan which was 9.9% at the time ( mid december )

Technically it is unsecured but to get the loan you must have a Northern Bank mortgage and they hold your title deeds as security. I think you may find a clause in your mortgage that it secures all debt to the Northern, at least it used to be that way.

blondie21

BigAl94 wrote: »

Technically it is unsecured but to get the loan you must have a Northern Bank mortgage and they hold your title deeds as security. I think you may find a clause in your mortgage that it secures all debt to the Northern, at least it used to be that way.

You are correct you need to have a mortgage, but ours is now paid off but the bank still has the deeds, so its a secure place as any to store the deeds.
any way the rate has come down since the loan was taken out so the amount this month will be amended from the original monthly payment.