Moving secured Loan away from mortgage

danielley

Hello there

Please be nice... tried posting this on the Northern Rock end of mortgaged deal thread but got no replies so here goes.....

My partner has a mortgage & loan with Northern Rock. The total outstanding is £89,000, the breakdown being a mortgage of £76,000 and 2 secured loans totalling £13,000.

Assuming he is out of any fixed rate term on the mortgage, is it possible to refinance the loan elsewhere and just keep the mortgage part with NR, or are there penalties for this i.e. Mortgage rate increase (currently on the SVR which is 4.something i think )

I know this is a bit sketchy, but I am looking for a broad idea of the way that Northern Rock operate before I can convince him to contact them

The reason he is not looking to remortgage is because of negative equity, however if the loans are repaid, and only the mortgage element remains then he should be in a position to remortgage.

Thanks very much in advance

PS I have tried ringing NR but they wont even give me a hypothetical answer

nzmegs

I would be interested in the answer to this as well. We ar ein a similar position. Moving the loan elsewhere would make remortgaging much easier. Will NR allow us to pay off the loan portion only with the proceeds of another loan?

getmore4less

Dig out his mortgage/loans T&C and have a good read the answers should in there.

The fisrt step will be finding someone to lend the £13k.

Then you will need to remortgage with £13k debt elsewhere.

What's the place worth and what's the income?

_Andy_

I doubt you'd find a rate lower than what the loan currently is

danielley

Hi everyone, thank you for your replies

Nzmegs, hope we can get the answer to this then!

I know he wont find a lower rate, but at least the new loan wont be over 29yrs so although it will be less affordable repayments now, he will pay a lot less interest in the long term.

Currently repaying £12,000 @ 4.75% (ish) over 29yrs = £64.51 a month total repayable £22100.47

If he switches it to loan with say 10% interest over 5 yrs = 254.96 a month - total repayable £15297.87 Saving £6802.60

If its possible to move the loan element I just need to convince him to start paying an extra £200 a month He is a head in sand kind of guy unfortunately.

AngelsMadv

danielley wrote: »

Hi everyone, thank you for your replies

Nzmegs, hope we can get the answer to this then!

I know he wont find a lower rate, but at least the new loan wont be over 29yrs so although it will be less affordable repayments now, he will pay a lot less interest in the long term.

Currently repaying £12,000 @ 4.75% (ish) over 29yrs = £64.51 a month total repayable £22100.47

If he switches it to loan with say 10% interest over 5 yrs = 254.96 a month - total repayable £15297.87 Saving £6802.60

If its possible to move the loan element I just need to convince him to start paying an extra £200 a month He is a head in sand kind of guy unfortunately.

Would it not be better for him to make overpayments on the mortgage of £200 a month? This would pay the loan off about 8 years quicker and save you about £20k in interest as far as I can see?

I've got a similar loan with NR as I did the 125% thing to get on the ladder (it was right for me). I make overpayments every month and have my 30 down to 21 in 4 years. Good luck with whatever your friend decides. It's good that he has someone like you to do it for him.

When the house then does become +ve equity, do the re-mortgage then.

nzmegs

Angels - I know I could find this out by contacting NR or checking my paperwork, but do NR allow you to pay the loan as a separate element. ie can I specify that an overpayment is to go on the loan only and not against the mortgage.

Our fixed perioed is about to end in around 2 months. We have around 10% equity (not enough for a decent rate elsewhere), but taking the loan element off would increase the equity amount and improve our chanvces of getting a mortgage elsewhere.

Thrugelmir

As the property is in negative equity finding another lender to offer monies on an unsecured basis would be extremely difficult. Also very expensive.

As others have said overpay the existing loans. Over time the position will improve . As far away as it may seem at the moment.

danielley

AngelsMadv wrote: »

Would it not be better for him to make overpayments on the mortgage of £200 a month? This would pay the loan off about 8 years quicker and save you about £20k in interest as far as I can see?

I think I have omitted the fact that the Mortgage element of the loan is INTEREST ONLY :eek: So he would have to make overpayments of £375 a month for 20yrs to clear the loan

getmore4less wrote: »

Dig out his mortgage/loans T&C and have a good read the answers should in there.

The fisrt step will be finding someone to lend the £13k.

Then you will need to remortgage with £13k debt elsewhere.

What's the place worth and what's the income?

The place was valued at £85k about 12months ago, its had a new bathroom since, but I still think it wont go for more than £82k.

My partners income is approx £27k after his fixed outgoings I reckon he should have approx £500 left, he has a car loan that is coming to an end next year which will give him back £200 a month.

He has the funds to chip away at the debt, he just isn't willing to face the reality of the situation just yet.

I think he feels 'hard done to' as he bought in 2005 assuming that when he wanted to sell up and move on, he could, but now he is 'stuck' with a property he doesn't want. He wants a magical solution and I need to make him realise that the closest he has to a fairy godmother is me, trying to help him sort this out! :A