Northern Rock Mortgage ends May 2012

stripeycat5

We got a fixed rate Mortgage with Northern Rock in 2007 just before everything went wrong. We did not have a deposit so Northern Rock lent us £99,000 for the mortgage and then £21,000 unsecured loan for the rest for home improvements - this was all on an interest only basis. Now we need to try and re-mortgage in April/May and was just wondering will anyone actually touch us since we were with Northern Rock in the first place? Just wondered what advice we could get before we pay for a mortgage advisor. We have done a lot of home improvements to the house, new roof, render, bathroom etc but still may be in negative equity the way things are going.
Any advice would be greatly received!
Many thanks.

_Andy_

If you're in negative equity then you won't be able to change mortgage lenders.

luckwudaveit

Stripey, I am in a similar position to yours, with no savings and in negative equity. We were sold the NR mortgage on interest only terms and advised that within 2 years the house would gain enough value to enable us to remortgage onto a repayment deal. Over 4 years on and no sign of house prices increasing.

opinions4u

luckwudaveit wrote: »

Stripey, I am in a similar position to yours, with no savings and in negative equity. We were sold the NR mortgage on interest only terms and advised that within 2 years the house would gain enough value to enable us to remortgage onto a repayment deal. Over 4 years on and no sign of house prices increasing.

What's stopping you going on to a repayment deal with NR?

pleasedelete

Are you sure that your northern rock is such a bad deal? What will the rate be? Can't you repay even on an interest only?

I have a northern rock interest only mortgage. The rate is quite low- we have been to brokers twice who say stick with it you won't get better(we had a redemption penalty but nr withdrew these last year). We have about 60 per cent equity in the house I imagine.

I can pay off my capital at anytime- I go into a branch but can also send a cheque and I think pay by phone (haven't done that). I phoned them about switching it to repayment and they said it would be stupid as my rate would change and as it is I just pay off a big chunk every 3 months (but it could be monthly).

luckwudaveit

opinions4u wrote: »

What's stopping you going on to a repayment deal with NR?

The cost of it! I called NRAM a few months ago and the SVR on a repayment would stay at the same rate - 4.78%. I make regular over-payments to reduce the capital as funds allow, and this is roughly the same overall payment as the repayment amount would be per month.

However, I cannot afford the over-payment every month (Xmas, holidays, etc) and could not commit to the repayment mortgage. This would be compounded by an increase in the base rate.

kingstreet

IIRC NRAM Standard variable rate is 4.79% when a fix or other offer ends.

The OP may be able to remortgage if the unsecured loan is left behind de-linked. However this sees the rate increase to around 10% and a sizeable saving on the mortgage interest rate will be needed to make this work. The equity in the property will determine how good the rate might be...

AFAIK NRAM is waiving early repayment penalties, so you do not need to wait until your fix ends should you wish to enquire about moving the mortgage now. Call them and find out.

0845 609 9610

pleasedelete

Mine is just under 3 per cent according to a mortgage calculator on line. It was a cash back with a 10 year tie in about 7 years ago. It replaced a previous nr together mortgage.

It has been a brilliant mortgage for us. We bought a wreck and used cashback to renovate it.

Northern Rock isn't necessarily a bad thing.

stripeycat5

Would it be worth us ringing Northern Rock and asking them re re-mortgage now then? We would ideally like to have a repayment mortgage but had to have the interest only one to get on the housing market hence why we are stuck with it. We are currently paying around 6% I think so if the current rate is lower it could work in our favour. The other thing is it worth having our house valued privately as when we spoke to a mortgage advisor (he rang us from a price comparison site) he said they base the house price on what others have sold for in the area. As we live in rural Wales there are many houses in our postcode of all different shapes and sizes so just a postcode search doesn't really count. Sorry I'm a bit clueless about all this we felt we were very lucky to get the mortgage when we did as there was no way we would get on the housing market now. Many thanks for all the comments.

luckwudaveit

There's no harm in calling them at all. That's what I did just to see what a repayment mortgage would cost. You don't have to commit to anything, just make an enquiry.

Just beware that the base rate is low at the moment, although you appear to be paying a high rate at 6%. Good luck.

silvercar

Consider carefully before moving from interest only to repayment. If money is ever likely to be short, an interest only with no tie ins gives you the flexibility to make overpayments each month. So you could make the equivalent overpayment to bring up the payment to a repayment mortgage without the risk of having an unaffordable repayment mortgage.

We see post on here from people being taken to court for repossession who can't afford the repayment mortgage they swapped from IO. Once you are on a repayment mortgage, the lender is under no obligation to allow you to pay interest only when times are hard.