Together Mortgage - Unsecured Loan

QuiteNice

Does anyone know what happens if you redeem a NR Together mortgage - but only the mortgage part - and the unsecured part is kept 'running'?

My sister is selling her house, she expects to sell it for just about the amount owed total, however she wants to use some of the sale value to consolidate other debts she has at a higher rate. I thought her solicitor had a duty to pay the mortage and the loan component off before giving her any profit from the sale but she says that NRAM will just let the loan run albeit at a higher rate than the mortgage. Is the solicitor likely to agree to only pay the mortgage part and what will NRAM say about it?

I am really worried she is going to end up in trouble for mortgage fraud or something or that she won't get another mortgage but she says the loan component is nothing to do with mortgages and won't have any impact.

Thanks.

hcb42

she wont get into trouble - the lender will either allow it or they won't.

Thrugelmir

QuiteNice wrote: »

Is the solicitor likely to agree to only pay the mortgage part and what will NRAM say about it?

Not the solictor's decision. NRAM could refuse to discharge the mortgage as their agreement is required.

opinions4u

There is no requirement to repay an unsecured loan on sale of the property.

She should want to find out what the unsecured rate will be though before deciding to repay other debt.

kingstreet

The terms and conditions at the time she took out the arrangement still apply.

She can repay the mortgage, the secured element, and leave the unsecured loan in place. If she does this, the "delinked" unsecured loan will be charged at a higher rate which is shown in her original mortgage offer and loan agreement.

IIRC, the loan rate is typically 3% or 5% higher than the Northern Rock standard variable rate, so will now fall in the 8% to 10% range.

By not repaying the unsecured loan, she will have funds to repay other debts or for other readers may well have a deposit for another property and this is fine, as long as the new mortgage lender is happy there will be a sizeable loan continuing after completion.