Northern Rock Together

foolishqueen

Hello Everyone,

I have a NR Together mortgage which is due to commence on 1st Feb. I know you can overpay on the mortgage and that I can apportion the overpayment between the secured and unsecured element as I want.

My question is that I will have about £100 each month with which to overpay. If I use the whole amount on the unsecured bit, does it have the effect of reducing the amount of interest I will pay on it?

I can't remember if the interest on the unsecured bit is front loaded (or even if they can still do this?!)

Thanks in advance

Cheers.

foolishqueen

Anyone?

dwight-van-man

Hiya, the unsecured portion operates on exactly the same basis as the secured - it is not front-loaded and making an overpayment will have exactly the same benefit as it would had you apportioned it to the secured portion.

A couple of points to note though - if you simply make an overpayment without instruction, it will be split between the secured and the unsecured and your monthly payment will be reduced to reflect the new balance. If you want the full overpayment to be apportioned to the unsecured you must make this instruction at the time of the overpayment. Likewise, if you want to maintain the initial mortgage payment, which will have the effect of further overpaying the mortgage, you have to make this instruction clear. You mention Together is fully flexible - it is, allowing you to redraw any overpayments at product rate BUT - if you think you may need to ever redraw your overpayments, make them to the secured portion rather than the unsecured as the consumer credit aspect of the unsecured makes it pretty difficult to redraw, although I can't remember why.

On balance, there is no real benefit of making the overpayments one way or the other - your interest is still recalculated and the overall balance reduces.

foolishqueen

Hiya,

Thanks for the reply. My main aim is to try and pay of the unsecured element as quickly as possible. Were I not t overpay as much as I could I would have the unsecured element habing over my for the term of the mortgage and it would cost me a horrendous amount in interest! So it is good to hear that the interest on the unsecured bit it not front loaded!

Thanks again.