Northern Rock Mortgage ends May 2012

kingstreet

stripeycat5 wrote: »

Would it be worth us ringing Northern Rock and asking them re re-mortgage now then?

You are with NRAM - not Northern Rock.

You cannot move to another product with NRAM as they don't have any. They will allow you to leave them penalty-free but they won't allow you to move from a fix to their standard rate without penalty, if at all.

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.

If you wish to investigate the possibility of remortgaging to a new lender, you first need to establish how much the de-linked unsecured loan will cost each month.

The other thing is it worth having our house valued privately

No. Probably not.

When you know the de-linked loan cost, you can establish with a remortgage application to a lender offering a fee-free deal if the property is worth enough to allow you to proceed. Don't forget to put down the de-linked NRAM loan as an outgoing.

Here's an example.

Current situation;-

NRAM mortgage - £99,000 secured
NRAM addition - £21,000 unsecured.

Current monthly payment is £120k @ 6% interest only = £600. On repayment over 20 years, this would cost £860 and over 20 years on 4.79% SVR it would be £778.

Example property value £110,000.

De-link unsecured loan - £21k on capital & interest 20 years @ 10% = £202.65.

Remortgage £99k on £110k value (90%) over 20 years capital & interest = £591.61 per month based on rate of 3.84% with HSBC. This gives a total monthly payment of £794.26.

It appears you'd be better off (by around £16 per month) seeing out the fix and allowing the mortgage to fall onto SVR, then convert to repayment, if you need this discipline forced on you.

silvercar's advice to remain on interest-only and make voluntary capital repayments is sensible in my view, if you are disciplined enough to overpay voluntarily.