Re: Northern Rock Together Mortgage - HELP!

Tuck1705

Hi all, first time poster in need of some help/advise regarding a Northern Rock Together Mortgage.

We took the mortgage out in May '07 in order to buy a 2 bed property valued at £172,000. The mortgage part of arrangement was for £165,000 and we then had a £16,000 loan bolted on top to take total borrowing to £181,000 (borrowed extra as first time buyers to cover furnishings, legal costs etc.).

This was sold to us as an interest only arrangement. As naive first time buyers who had only evert seen housing prices go up we thought the house value would continue to rise thus allowing us to remortgage at some point in the future to pay off loan and go to a repayment mortgage.

Anyway, this didn't happen! The value of the house plummeted within months of us buying it - being a town centre property the value was hit hard and bottomed out around £155,000. Bearing in mind our total borrow of £181,00 this left us in major negative equity.

Obviously NR passed us on to NRAM and we have continued to make payments on an interest only basis for the past 4 and a half years without any real change in the property value.

In order to increase our household income I accepted a new job and we have re-located away from the property. We now live in rented accommodation & have rented the old house out, but then rental income does not cover the interest only mortgage and loan payments. We make up a shortfall of £200 per month, as well as picking up the cost of living in our new place.

We have given the housing market time to come back but it doesn't seem like it will happen any time soon and so are desperately looking for a way out of this mess. Paying £200 to sustain an interest only mortgage on a property we no longer live in and is in negative equity anyway is a soul destroying state of affairs. We just feel as though we have thrown away thousands on a mortgage/property with no value in it and in doing so have seriously damaged any hope we had of having a comfortable financial future.

We are now living month to month with no savings whatsoever. We both have our own debts to pay off as well and have not spend out on holidays/luxuries for years. We both work long hours to try and maximise our incomes but the strain is taking hold.

Can anyone help us? what should we do? We have thought about trying to sell the property and then paying off the negative equity from the sale? This would help to draw a line under things but would leave us with a debut of around £20-25K which would be a hard one to take given the amount we have already paid into the interest only mortgage.

We have also thought about trying to use the 'irresponsible lending' angle to put together a case with one of these PPi companies. We had debts of over £20K when we took out the mortgage in 2007 so not too sure how we were ever approved in the first place (I know we signed the papers though and ultimately our finances are our responsibility).

We have discussed porting the mortgage with NRAM but they require a 5% payment of the value of the new property which we just do not have and are unlikely to ever have given we cannot save anything month to month.

We are both in our early 30's and keen to start a family but just can't ever see when we will be secure enough to do this. The relationship is becoming strained due to these pressures and without a resolution things will only end one way.

Any help would be most gratefully appreciated.

Tuck

Tixy

I wouldn't go the route of irresponsible lending side - and certainly steer well clear of those vulture companies advertising themselves on daytime tv and cold calling people.

Your position certainly doesn't seem to be something you can carry on with as you are - I'd consider speaking to one of the debt charities for some help and advice.

For example it may be the case you could consider an IVA or even bankruptcy - which whilst not a nice prospect is not something to rule out altogether.

Did NR give permission for you to rent out your property? I know that they haven't for many people in similar situation, which has made things even harder.

Tuck1705

Hi Tixy, thanks for your response.

Yes NR did give consent to let but only for 12 months initially. Cost us £100 to set up.

We did look at the IVA/Bankruptcy option when we relocated but didn't seem to meet the criteria as we are currently meeting all our obligations.

Things would possibly be a bit easier to manage if we could negotiate a bit with NRAM but they are very difficult to deal with. For example a reduction in payments to the level of rental would be a start so we do not pick up any additional costs. Then maybe in 12 months the market will improve and we can look to sell, but to be honest I don't think NRAM are even able to offer a change in our mortgage terms. The response we've always got from them is very matter of fact and unwilling to take circumstances into consideration.

wannabee_in_credit

You have my sympathies, but I think NRAM are also a bit tied as they're dealing with all of this 'bad debt' and don't offer their customers any new or changed deals. We got our mortgage with them when they were Northern Rock and are on repayment with their svr of a massive 4.87%. I am now in dmp so we have no chance of a better deal, and although we have equity, it's not 25% either. So we're stuck with them. Can't get out, can't get a better deal. And that's just me pittled about paying more interest than I think we should.
I hope you can get it sorted out somehow because it must be soul destroying to be in that position.