Remortgage - help a newbie...

rooperasmus

Hi,

I am a newbie to the forum and I have started a major financial "overhaul" in the last few months and we are both on a mission to pay of all loans and credit cards over the next 10-12 months. Or more like a major financial learning curve - it is VERY scary when you realise how little you really know about your own mortgage, credit ratings etc etc and how little most of understand things such as global financial events and what really moves the markets.

So in short: (please let me know what other information is needed since Im new to this)

• We have a 5 year interest only fixed deal with Northern Rock and its coming to an end June 2012 after which we will be paying interest + repayment on a "variable rate" (that is what the papers say) ie a very high rate around 7.5%.
• We got one of those "crazy deals" in the sub prime heyday of which details are as follows.
  • £175K secured loan to complete the purchase. Rate 6.49%
  • 30K unsecured loan @ 6.49%
  • Both those rates will go up to the "variable rate" in June 2012
• The property price was £185K - it is probably worth about the same still. So we got a 105% mortgage. (mental!!)
• We have never defaulted on payments etc and should have an ok credit score (will get onto checking this asap!!)

I am half employed half self employed. My partner has been earning good money this tax year (up to 80K) but he is about to start his own company in the beginning of 2012.

Let me know what our options are - any help or even pointing to the right direction would help!!

Thank you in advance :T

DannyboyMidlands

I reckon your priority is to avoid that 7.5% rate after June 2012. This means you'll need to remortgage which means you'll need some savings/equity. Am I right to assume that with earnings of £80k, you have some pretty hefty savings and/or a repayment vehicle for the interest only loan?

kingstreet

The 7.5% rate is probably the SVR from when you took it out. This has now reduced and will be more like 4.7% when the current deal ends.

rooperasmus

Hi,

Thanks for the reply. :j

Yes he has decent savings, which are all going to his new business start up...:(

I was wondring if the £30K unsecured loan could be treated as separate from the £175K mortgage on the house. Then we would indeed have some equity. I will give NRock a call to check this.

rooperasmus

kingstreet wrote: »

The 7.5% rate is probably the SVR from when you took it out. This has now reduced and will be more like 4.7% when the current deal ends.

thanks! Very interesting. As above - I shall give them a call now I know what to actually ask.

dimbo61

Are you reading 5 year old paperwork ?
Northen Rock,s current rate is either 4.79% or even 4.54% ( loyalty rate )
Dont know which one you might go onto but why not give the mortgage centre a call and ask
You dont give the term of the mortgage but I guess it was a " together " mortgage and interest only as well so you have paid nothing off the debt in the last 4 years.
Now you must clear the credit cards and any other loans before next June because you may only have a 20 year term ? and thats a big mortgage to repay over 20 years never mind the £30K loan
Good Luck
PS no chance or remortgaging to another lender BUT you may be ble to take another product with Northern Rock and the worst that can happen is that you go onto the SVR ( but its repayment!)

dimbo61

Sorry to slow other posters beat me to it !!

kingstreet

To answer the OP overall;-

- you have a Together product with NRAM.
- you will revert to NRAM's standard rate when the fix ends, currently 4.79%
- your current borrowings exceed the property value
- you can remortgage the secured element to a new lender by delinking the unsecured loan, however you do not have the equity to do this now
- delinking means the unsecured rate will increase to around 10% so you have to carefully consider the cost difference when doing so
- suggest overpaying to reduce the unsecured loan as quickly as possible
- there is no automatic conversion to capital & interest at the expiry of your fix. You will need to make this conversion by asking NRAM
- the unsecured element is always capital and interest IIRC.

kingstreet

dimbo61 wrote: »

Are you reading 5 year old paperwork ?
Northen Rock,s current rate is either 4.79% or even 4.54% ( loyalty rate )
Dont know which one you might go onto but why not give the mortgage centre a call and ask
You dont give the term of the mortgage but I guess it was a " together " mortgage and interest only as well so you have paid nothing off the debt in the last 4 years.
Now you must clear the credit cards and any other loans before next June because you may only have a 20 year term ? and thats a big mortgage to repay over 20 years never mind the £30K loan
Good Luck
PS no chance or remortgaging to another lender BUT you may be ble to take another product with Northern Rock and the worst that can happen is that you go onto the SVR ( but its repayment!)

Loyalty rate applies after seven years and it's NRAM, so no products to transfer to when a fix expires.

rooperasmus

kingstreet wrote: »

To answer the OP overall;-

- you have a Together product with NRAM.
- you will revert to NRAM's standard rate when the fix ends, currently 4.79%
- your current borrowings exceed the property value
- you can remortgage the secured element to a new lender by delinking the unsecured loan, however you do not have the equity to do this now
- delinking means the unsecured rate will increase to around 10% so you have to carefully consider the cost difference when doing so
- suggest overpaying to reduce the unsecured loan as quickly as possible
- there is no automatic conversion to capital & interest at the expiry of your fix. You will need to make this conversion by asking NRAM
- the unsecured element is always capital and interest IIRC.

This is VERY helpful :T - just the info I needed. Im currently on hold to NRAM on my phone to shed a bit more light on this. (" your call is important to us..." :rotfl:)

rooperasmus

Hi,

Just got off the phone with NRAM, all clarified - thanks for pointing out what questions to ask.

Only one question I forgot to ask:

The current rate of 4.79% is obviously linked to the BOE base rate. So if BOE put the base rates up say another 1%, does it mean that the mortgage rate is then 5.79%?

Thanks