Locked into abuy to let

A56

We have a buy to let mortgage with Northern Rock, interest only, fixed rate of 6.9% :eek: and are locked in until October. We have been living at the property since April 2008 and it is our only property. My wife has been out of work since October last year and we are struggling, we would like very much to get out of the deal and switch to the standard variable rate,without paying the penalty of £5100! Any advice most welcome

opinions4u

They won't let you.

Why should they?

A56

...erm thanks for the 'advice'......because its a defunct product, because we are not renting the property out, but mostly because we can't afford it and will be forced into arrears at this rate. I thought that mortgage providers were now obliged to help those in financial difficulty and that there are new rules on this coming into place next month, again any advice (rather than dismissive comments) would be appreicated.

nesss

In your small print is there a condition that you cannot live in the property and that if you break conditons that you revert to variable? My chesham one does, just a thought.

ILW

You can only ask, but consider if rates had gone up and SVR was say 10%, would you have agreed to NR wanting you to switch from your fixed. An agreement has two sides.

dunstonh

but mostly because we can't afford it and will be forced into arrears at this rate.

Dont mean to sound harsh (its not meant to be but text can come across like is) but you entered into a high risk investment (mortgaged buy to lets are high risk) and now its not paying off you want someone else to take the liability. That isnt how investing works. If you take risks and the investment pays off then you get the rewards that reflect that. If the risks dont pay off you have to accept the losses that go with it.

I thought that mortgage providers were now obliged to help those in financial difficulty

Not necessarily and it doesnt apply to investment properties. Your only hope is to persuade them to allow you to go into arrears (which will kill your credit history for years) when that time comes.

What has changed in your circumstances that sees you unable to afford being on a repayment mortgage and at an interest rate that is lower than the long term average? (if you want to make a case for hardship then showing what has gone wrong for you is important. A failed investment would not be good enough reason otherwise we would be bailing out everyone who invested in the stockmarket or any other investment).

Trying_to_be_good

Why are you living in the property? I'm assuming something's changed from your original plan, and you weren't intending to live in the property.

Will it let? If so, could you live somewhere cheaper, thereby making a net profit to pay the mortgage with?

opinions4u

A56 wrote: »

...erm thanks for the 'advice'.....

You're welcome. I got to the point quickly.

because its a defunct product

No it isn't. You said yourself it runs to October. Northern Rock raised that money wholesale and are committed to paying a high fixed rate to their lender in the same way you are to yours.

because we are not renting the property out

Dig out your terms and conditions then. You may well have broken them. I don't know what the implications of this are, but you should find out before you contact them.

but mostly because we can't afford it and will be forced into arrears at this rate.

While I am sympathetic, they will have policies for dealing with people who can't afford the monthly payments. That doesn't mean they have to give you a cheaper rate though.

I thought that mortgage providers were now obliged to help those in financial difficulty and that there are new rules on this coming into place next month,

They will work out what they feel you should pay and you should then pay it. It will prioritise the mortgage payment ahead of any unsecured debts. The product and your financial position are different things though.

again any advice (rather than dismissive comments) would be appreicated.

I didn't make a dismissive comment. I gave you a fact.

silvercar

As a BTL mortgage you do not get the same level of protection as residential mortgages from the FSA. It could be in your interests to tell NR that you are now residential and ask for it to be noted on your file.

If finances are really tight, why not let it out and rent somewhere cheaper yourself. As it is a BTL mortgage you already have the lenders consent to do so.

puddy

could you get lodgeers or do extra work??

Robert_Sterling_3

A56 wrote: »

we would like very much to get out of the deal and switch to the standard variable rate,without paying the penalty of £5100! Any advice most welcome

Wouldn't we all like to be charged £5,100 less than was due.
My wife and I were shareholders in Northern Rock.
They went broke.
We each lost £6,000.