Northern Rock to First Direct, should I?

PJ1973

Frequent lurker, apologies for the 'looking for free advice' first post.

I currently have a mortgage of £128,100 with Northern Rock (£101,300 secured - £26,800 unsecured) and pay £862 a month on a repayment basis with 18years 8months remaining. The rate of interest is 4.78% for both secured and unsecured. This is their Standard Variable Rate. If I moved the secured part of the mortgage away from NR the unsecured rate would increase by 5% to 9.78%.

I bank with First Direct and they are currently offering a fees free remortgage with a rate of 4.29% fixed for 2 years then reverting to SVR (currently 3.69%) – based on a term of 19 years – monthly cost of £823. I like First Direct, don’t like NR and quite fancy fixing my rate of interest (they also do a 4 year fixed – but I would then be increasing my monthly cost, which seemed a little perverse to me:money:)

I have never defaulted on anything, but probably have about £6K in debts (inlcuding £1700 on a Lloyds bank a/c overdraft - which they want statements for) . Affordability isn’t an issue, but the loan to value might be as I need my house to be valued at £155K to get this 85% LTV mortgage and I’m not sure it’s worth that. The unsecured part of the mortgage was used to totally renovate the property (a few years back now) and there are a couple of things to finish off before the house is signed off by building control – could First Direct or solicitors ask for this information?

I’ve gone through a telephone application and they’ve sent me the paperwork and want to arrange a valuation.

On the face of it, it might be worth moving . . . but is it worth the hassle? Can anyone spot any pitfalls/complications/costs? Presumably I’ll need some kind of solicitor involvement?

I’d welcome any views.

Phil

Thrugelmir

PJ1973 wrote: »

Affordability isn’t an issue,

A few points to consider. So let's start with.

Then why the overdraft and other debt? ( an underwiters view)

Do you return into credit on pay day then drift back into overdraft every month?

Also just to clarify are you with NR or NRAM as possibly would make difference to your options. I suspect I know which.

PJ1973

. . . . yes NRAM . . . one of the reasons I want to move.

Regardining debt/affordablity . . .

In the last couple of months I've finshed paying off a couple of long terms loans (cars). I'm £400 a month better off as a result and will use this to pay off overdraft and CC's (which are on 0%).

The CC debt is historic, and mainly the result of holidays:o. The bank overdraft was down to my own bad management. I started a fresh when I moved to First Direct and manage things a lot more closely now.

I suppose I don't really have anything to lose with progressing - although if they decline to lend, presumably I have to disclose this in the future. I've spoken with First Direct since the first post and they assure me that has this is a remortgage there are no soliciotrs costs.

The one other thing that bugs me is whether making the whole thing secured might come back to haunt me down the line - - - e.g. if houses prices dropped further.

One option I do have is to sell my classic car worth £30K (which I love but don't really use and which I see as an investment), pay off the unsecured part, get a better LTV. Would an underwriter take into consideration an assest like this when making a decision . . . probably not.

Phil

Thrugelmir

PJ1973 wrote: »

One option I do have is to sell my classic car worth £30K (which I love but don't really use and which I see as an investment), pay off the unsecured part, get a better LTV. Would an underwriter take into consideration an assest like this when making a decision . . . probably not.

Always buy another classic car in less troubled times. Releasing the cash would kick start and accelerate matters. Simply put that car is costing you £1,500 a year in interest plus actual expenditure.

Well worth thinking about....... though your decision.

dimbo61

The underwriter will consider you having £30,000 in the bank and using that to clear all your other debts
you could then look at the 4 year fix as you would owe less and the chance to get you life in order over the next 4 years

PJ1973

One cost I hadn't thought of is the £250 mortgage settlement fee NRAM.

Having another look at what they're offering, I might go for their 3.49% tracker and risk rates rising in the near(ish) future.

This would bring my monthly payments down from £862 to £770.

Don't think I'll sell the car just yet . . . . perhaps consider it when rates start to rise and I need a better rate. You're got to have some joy in your life.



Phil

PJ1973

They offered me the mortgage I needed subject to a valuation . . . . the valuer came round the other day and confirmed value is within 85% LTV . . . . so I'm very happy and just waiting to complete:j

The only cost has been the £250 fee to NR (plus the morning off to meet the valuer).

First Direct have been brilliant as always.

Phil

neil9313

PJ1973 wrote: »

They offered me the mortgage I needed subject to a valuation . . . . the valuer came round the other day and confirmed value is within 85% LTV . . . . so I'm very happy and just waiting to complete:j

The only cost has been the £250 fee to NR (plus the morning off to meet the valuer).

First Direct have been brilliant as always.

Phil

I can't fault FD been with them for 20 years. See if you can get NRAM to wave the £250 fee there is something about this on the NRAM site.