Northern Rock Overpayments

davidndawn

We are now almost 4 years into a 15 yr fixed term repayment mortgage with NR at 5.2%.

We are thinking of moving to the OneAccount but obviously there are Eerly Redemption Fees of over £5k

When we took out the mortgage with the advice from the financial adviser we did ask about the ERC. He advised (verbally) that as long as we paid off the mortgage apart from £1 that we would not have any ERC or financial penalties.

Having read thoroughly all paperwork from both our financial adviser and NR offer of loan/terms and conditions i am confused!!

Any assistance GREATLY appreciated!!

Our Financial Advisers keyfacts paperwork state the following for overpayments

"You are permitted to make overpayments on this mortgage. Following receipt of a regular overpayment or a lump sum repayment, the amount you owe and the amount of interest that you pay will be recalculated with effect from the following day. There are no Product Early Repayment Charges applicable to overpayments"

Now the exact same paragraph is also in the NR offer/terms

BUT...... there is some small print on the rear which is headed "Early Repayment Charges"

and reads

"If some or all of the loan is repaid before the end of the term (other than any capital we require you to pay us in the monthly payments) you will have to pay us:

Interest on the amount you repay up to the end of the month in which you repay it (and the interest will be calculated as if the account had been paid in full and the amount repaid had not been repaid until the end of that month) and any early repayment charge referred to in the offer"

Alisonb1975

I am with Northern Rock and it does get confusing. I recently called them about making a large overpayment and they told me that I could pay as much as I wanted off the mortgage without paying penalties as long as I didnt close the account and that there was a balance of at least £100 (my early redemption figure was around £3000). My fixed rate is up in a few months so I will just move straight over to my new provider.

I dont know if you could open a new mortgage with someone else while leaving a small balance on that one. It may be worth calling them and finding out. I dont know if there would be issues preventing this - maybe with the deeds. Someone else may come along soon who has more knowledge on these things.

davidndawn

Cheers Alison

Was hoping for a few more replies by now but will hang out until i can discuss with NR on Monday.

It is all a bit misleading

My thoughts were to do exactly as you say and pay everything off the existing mortgage apart from (for example £1) I was hoping that the new mortgage provider would be able to make the payment to NR and hey presto but i guess im gonna get a big wake up call as soon as somebody more in the know replies?

Cheers n good luck with the move

VIGILANT22

....if you leave NR as any other lender you pay the erc's....of course you can't leave a £1.00 on the account!...If yr transferring to the One Account NR will transfer yr deeds to them...No new lender will pay yr erc's...they dont need yr business that bad.....

By the way why are you leaving NR when you have almost all the facilities of an offset at the moment!!!????

davidndawn

Thanks Vigilant

Have i touched a nerve there? or am i reading too deep into your reply ?


I posted this question because - as the post read - i had been through
all documents and was a little disorientated by it all AND also as the thread read - we were advised by the financial adviser that we were able to pay off the mortgage (but leave exactly £1 in) and we would face no ERCs. Maybe by that he meant if we did not move the mortgage to a different lender by which the deeds would remain with NR??

Sorry but as i have almost no knowledge of mortgages and been totally ignorant to them for the past 15 yrs perhaps you wouldn't mind expanding a little on your 2nd paragraph - we already have all the facilities of an offset?????

VIGILANT22

davidndawn wrote: »

Thanks Vigilant

Have i touched a nerve there? or am i reading too deep into your reply ?


I posted this question because - as the post read - i had been through
all documents and was a little disorientated by it all AND also as the thread read - we were advised by the financial adviser that we were able to pay off the mortgage (but leave exactly £1 in) and we would face no ERCs. Maybe by that he meant if we did not move the mortgage to a different lender by which the deeds would remain with NR??

Sorry but as i have almost no knowledge of mortgages and been totally ignorant to them for the past 15 yrs perhaps you wouldn't mind expanding a little on your 2nd paragraph - we already have all the facilities of an offset?????

What I have highlighted is correct...say you paid the mortgage off in yr 12...instead of paying erc's you could leave account open with a £1.00

Why do you want to exit from NR & if you look on the back of your last statement...it will tell you how much it is going to cost to leave

VIGILANT22

VIGILANT22 wrote: »

What I have highlighted is correct...say you paid the mortgage off in yr 12...instead of paying erc's you could leave account open with a £1.00

Why do you want to exit from NR & if you look on the back of your last statement...it will tell you how much it is going to cost to leave

i've just seen it's 5k....

davidndawn

We had thoughts of leaving after comparing the One Account and with the recent opportunity to invest some cash left from a relative.

Seems we have the opportunity to significantly reduce the term and total repayment by switching to a One Account. With the cash which we could put into a One Account and by simply paying the same monthly mortgage payments we can reduce the mortgage from almost 20 yrs to under 10 yrs.

This is what has brought around the question of overpayment - i now have a better grip of the situation (i hope)

If i switch mortgage it is impossible to leave open the existing mortgage with NR?

Therefore overpayments do not come into the subject?

Therefore i would have to settle the NR mortgage in full meaning ERCs of £5k? and subsequently no way of avoiding ERCs?

Cheers

VIGILANT22

davidndawn wrote: »

We had thoughts of leaving after comparing the One Account and with the recent opportunity to invest some cash left from a relative.

Seems we have the opportunity to significantly reduce the term and total repayment by switching to a One Account. With the cash which we could put into a One Account and by simply paying the same monthly mortgage payments we can reduce the mortgage from almost 20 yrs to under 10 yrs.

This is what has brought around the question of overpayment - i now have a better grip of the situation (i hope)

If i switch mortgage it is impossible to leave open the existing mortgage with NR?

Therefore overpayments do not come into the subject?

Therefore i would have to settle the NR mortgage in full meaning ERCs of £5k? and subsequently no way of avoiding ERCs?

Cheers

You can overpay the NR mortgage as much as you like with no penalties...you can pay your lump sum in and this will reduce the term also .....in a few years time you may be glad of that 5.2% fixed....

Term 20 yrs
Current Outstanding mortgage ?
Monthly payment ?
Lum Sum?
I will do a quick calculation if you give me this info...

also remember moving yr mortgage you're adding 5k to the outstanding balance that's a crying shame...........

davidndawn

Initial Fixed Term: 15 years
Started: Sept 06
Interest Rate: 5.19%


As of 31st Jan 2010
Term = 19yrs 8mnths
Current Outstanding mortgage = £97,818
Monthly payment = £654
Lum Sum Available = £30,000

ERC = £5,250
Discharge of Mortgage Fee = £250

Many Thanks

VIGILANT22

davidndawn wrote: »

Initial Fixed Term: 15 years
Started: Sept 06
Interest Rate: 5.19%


As of 31st Jan 2010
Term = 19yrs 8mnths
Current Outstanding mortgage = £97,818
Monthly payment = £654
Lum Sum Available = £30,000

ERC = £5,250
Discharge of Mortgage Fee = £250

Many Thanks

By applying the 30k lump sum to your current mortgage your term is reduced to 12yrs and you save 24k in interest!!...........If you want to know more phone NR customer services and they will confirm this to you...Remember the one account is a variable rate currently 3.75% ...i imagine over 10 yrs this will go higher than 5.19%... and you will need to pay yr valuation and legal fees and you will also have yr erc's added.......

Did an adviser recommend you move or was this just something you thot of yrself?