How to become mortgage free with Northern Rock mortgage!

Lottiepots

Any tips would be gratefully received.

I understand that there is a lot of bad press about Northern Rock together mortgages.

A bit of background is that I live in Glasgow and due to the offers over system was really the only mortgage provider available to me unless we waited and saved a very large deposit. We didn't want to do this.

We have borrowed 170K in total. 157k is secured and has an APR of 6.1% The additional 13k is unsecured and APR is 6.9%. We are tied into Northern Rock for two years but I am becoming increasingly worried that no other mortgage lender will take us on due to the gap.

Anyway that is not my main point. Our mortgage payment at the moment is £1115 and we have an additional £110 that we would like to pay into our mortgage. We had worked out that this would reduce the term from 25 to 20 years. When I called Northern Rock they asked if they would split the overpayment 50/50 between secured and unsecured debts and I said yes but now I am not sure this is the best course of action. Would it be better all going towards unsecured as it's a higer APR?

Any advice would be appreciated! x

Cazza

Hi!

It doesn't make any difference! The APR is affected (and skewed!) by the upfront charges on the secured part of the mortgage, if, for example, you took out a 2 year fixed rate at 5.89%, both loans will be charged at exactly the same rate of interest.

Lottiepots

I see thanks for that. I called yesterday and asked Northern Rock to put all the £110 towards the unsecured part as I assumed this was the highest rate.

So I can just leave as be then?

Cazza

Yep, should be fine. If you ever remortgage then you will still owe the same total amount whichever way you do it!