Shall I Pay Off Mortgage Or Unsecured Loan??

Totster

Hi there

I have a Northern Rock Together mortgage. It was a 120% mortgage - 95,000 mortgage and 25,000 unsecured loan. I was fortunate enough to be given £20,000 from my parents and overpaid. They automatically apportioned £14,500 to the mortgage and 4,500 to the unsecured loan. Would it be better to pay the whole £19,000 off the unsecured loan? I am sure I asked them to do that but they ignored me. They now say I can change it to pay all off the loan. Any advice on the best way forward please?

feisty1

What is yr position at the moment, are you on a fixed rate, if yr out of yr deal are you looking to remortgage away from NR? If so how much has yr property dropped in value since it was valued at 100k?

Totster

I am staying with Northern Rock as my property has gone down in value. I just need to know if i would be best paying the £19,000 off the mortgage or unsecured loan. They are both the same interst rate a variable rate of 5.33%. I personally think its best paid off the unsecure loan but they said they just apportion it to each mort n loan. What do you think? I said i would seek financial advise n ring back tomorrow.

feisty1

It makes no difference if yr staying there and they're both on the same rate. When you have unsecured borrowing with NR in the form of a Together mortgage, if you mortgage away from NR and leave yr unsecured there, 8% is added to the svr, for example if u could move yr mortgage now........ on the unsecured you'd be paying 13.33%.......

mick_1967

I've started to overpay and asked specifically to offset the overpayments to the unsecured part. I wasn't 100% sure and thought this was best course of action to take. Mortg £70K loan £8k house value £78k

Totster

Thanks for your help guys

feisty1

mick 1967 It makes no difference which part you overpay as yr on the same rates, the calculations of what should be allocated where can be done on exit..........keep it simple!!

lilac_lady

Although it's the same moneywise, I'd find it easier to think of only having a single mortgage loan payment so I would pay off the unsecured loan.

feisty1

[quote=lilac_lady;17695645]Although it's the same moneywise, I'd find it easier to think of only having a single mortgage loan payment so I would pay off the unsecured loan.[/quote]


You do only have one mortgage payment and one mortgage account number on a Together Mortgage....the split is done on paper

Nonshy

Feisty is correct... makes no difference... except if do need funds back quickly then would have to sign credit agreement again.

So imo... just leave it apportioned

koexelek

lilac_lady wrote: »

Although it's the same moneywise, I'd find it easier to think of only having a single mortgage loan payment so I would pay off the unsecured loan.

That would be my gut reaction too.

However, the loan is unsecured, so if the borrower needed to move it might be better to have a lower secured element, as new deals at higher loan to values are more difficult