big mortgage worry

twerp

Hi, I appreciate people may have posted similar but wanted to share my current situation and look for any advice to help me

I bought my first house with my girlfriend in july 2007, the house was 90000, we borrwed a total of 104,000 from northern rock over 35 years, which is around the 110% mark. The mortage is split between a 86000 mortgage, and then around a 18000 unsecured loan.

We were on a fixed rate 5.x% for 2 years. This came to an end last year and we started on the tracker kind rate. At first the mortgage payments went higher because of the current rate, but due to the interest rate dropping, we now pay around £100 less than our beginning mortage payments, great!

Even though at the moment we are enjoying low payments, i am under no illusions the base rate will rise and we will begin to pay more and more in interest. When it does start to go up, apart from staying with northern rocks svr is there anything that can be done. Because of the 2 sections to the mortage, I was thinking maybe I could remortgage the mortgage section somewhere else, though I would need around 95% with no deposit, and then look at getting an unsecured loan for around 18500. However I dont think either of these are currently available from any banks.

Apart from that I really have no idea what I can do I am extremley annoyed with northern rock, in that they have nothing to offer existing customers in my kind of position, they must see that people are really going to struggle remaing on the svr. Especially considering that 'OUR' money bailed them out I just see it as a very unfair situation. I have spoken on the phone to them and have been told there is nothing they can do/offer. Would it be worth writing a letter to them to see if there is anything they can do, or is it just a waste of ink!?

Really would appreciate any help on this, I think that there are a lot of people who are in my current siutation who perhaps do not see the true problems around the corner. It just seems a completley unfair situation.

redpete

twerp wrote: »

Would it be worth writing a letter to them to see if there is anything they can do, or is it just a waste of ink!?

Waste of ink, if they are not offering follow-on deals to anyone then writing to them will not change their position for one person.

It just seems a completley unfair situation.

It's certainly a difficult position and no doubt worrying, but you signed up for a time-limited offer for which there was no guarantee that they would give you any discount deal when the time expired so I don't think it is unfair. The reason that you are unlikely to be able to get a similar deal anywhere else is that the global economy has changed since you originally took out the loans, so again not unfair just a consequence of a worldwide change.

getmore4less

At the time no one else would have lent you this much why should they now.

Why did you borrow so much?

Are you overpaying by the £100pm, if not why not.

What do you think NR should offer you?

SVR is not your problem it is short term fixes and borrowing too much.

Another 2y fix just leaves you in the same position in 2 years and if rates do go up you have the problem then.

delmar39

If NR cannot give you what you need then why not look to move your mortgage elsewhere? If you're currently tied in then you will be charged a redemption penalty for moving. If you wait until you go on to the SVR then you are free to look elsewhere without being charged. Also, I'm guessing you've paid off a bit of your mortgate so why don't you take out one mortgage rather than the unsecured loan bit? Go and talk to other banks and see what they can offer, or a good financial advisor that you trust.

beecher2

Overpay as much as you possibly can - not just the £100 you're saving on the mortgage, but every spare bit of cash. You need to get your LTV down to 90% before anyone will touch you. Go onto the Debt Free Wanabee forum for help on how to cut back elsewhere and make this your priority. Spending time complaining to NR isn't going to help as the debt's your responsibility at the end of the day - best to spend your energy in working out how to pay it off.

TrickyDicky

Moving might be hard, because house prices have dropped since 2007. your 90k house is likely to be worth less than that now, and you'll need 10% of the new valuation in equity.

Good luck moving, but I think you may be stuck. You signed the paperwork for such a huge loan - its not NR's fault, they didnt put a gun to your head.

Hoof_Hearted

I think the best solution is as advised, get the unsecured loan down by overpaying (or saving) as much as possible while rates are low. You probably have a while yet before rates go up and they are likely to go up in small increments when they do. I overpaid my mortgage due to an endowment shortfall, but carried on even after I had covered the deficit. This saved me a fortune in interest, shortened my mortgage and allowed me to retire early.

In the situation as described, you are unlikely to be attractive to any lender at a reasonable rate.

switched_off

Northern Rock have been split into two, the one you are in is now referred to as Northern Rock Asset Management. The plan is that the other half has good lower LTV debt and can be sold.

Northern Rock Asset Management has all the toxic debt that would of reduced the selling price of the good loans. I suspect that they are going to be encouraging as many people to leave them as possible by not offering terms to keep clients.

I spoke to a lady the day before yesterday who is with a lender who is also no longer lending and they offered here 20k to leave (she had a 100,000 mortgage).

Sorry there is very little that can be done.

twerp

Hi, I feel I may be being brandished here a little unfairly. I was a first time buyer new to the game, went to a mortgage adviser who put me through for this mortgage, thats there job, maybe I was a little niave at the time and maybe the information I was provided with wasnt the best.

Yes it is a large amount of money, but I can afford the payments and could probably afford more, but I have other debts which need paying off , credit cards etc. Sometimes I think a perfect picture is painted on how to do cut backs etc but it is not always so simple.

Couple of comments state that why is it Northern Rocks fault? In the grand scale of things, why was it my fault Northern Rock almost went to the wall, and WE the tax payer bailed them out!?

I can understand that I should have known more about what I was buying into, and that the current climate has altered things, but lecturing me on the past doesnt help me now.

beecher2

I don't think you're being 'brandished' - I think people are just advising you to take on responsibility for the decision you took when you bought a house. I don't think it is the mortgage adviser's job to work out whether you should buy or not, or to judge when it is the top of the market and unwise to purchase. Ultimately you bought into a pyramid scheme, and NR allowed you to do so, and then got caught out by the timing of the recession. You're right that lecturing you on the past doesn't help, but neither does blaming NR/your mortgage adviser.

Cutting back on expenditure and adapting your lifestyle certainly isn't easy - but sometimes you have to do it, as what's your alternative?

getmore4less

You borrowed an extra £14k when you bought the place and have other debts as well.

Where did the £14k go?

The NR situation is not the problem, taking another fix with NR or another lender will not solve the problem, long term you have to start paying back the debt.