advice on northern rock loan please!!

redwestie

Afternoon all,
Me and my partner have an unsecured loan from northern rock and would appreciate any advice on where to go with it!
We bought our first house back in 2005 and opted for a 'together mortgage' (part mortgage,part unsecured loan) form northern rock. We sold our house in 2009 and unfortunately only managed to pay off the mortgage, not the unsecured loan of £26,000. we have been paying around £222 a month since 2009 and now, with our first child due in 6 weeks we are fast realizing that we wont be able to carry on paying it along with our other monthly outgoings! I forgot to mention earlier that the loan is for a period of 420 months and by the time we have paid it we will have paid out around £85,000! Does anyone know what the max term is for an unsecured loan and do you think we have been ripped off in any way?? We just dont know what to do!
Any ideas???

simon2010

1. phone them and explain, see if they will refinance it for you.
2. do an income and ex plan and send it to them with a cover letter. They should soon see that you cannot make the payments
3. Unlikely you will get another loan of that size from anyone else at the mo, NR were chucking money and lending crazy amounts. They threw £40,000 at me no questions asked. Crazy times.
4. If no luck contact consumer credit counselling service and get them to deal / listen to them.

Good luck!

ILW

What did you spend the £26k on?

Can you sell anything?

Apples2

When you bought your first house you essentially had £26k equity in it, back in 2005 prices were still rising so I guess the idea was that when you sold, you cleared the outstanding unsecured loan, not take it with you.
That's a huge sum to borrow, and any new loan is unlikely to easy things enough to support a growing family.

Where do you stand with equity on your new house? leaving the waffly sales patter aside ('together mortgage' ) this was part of your Mortgage by another name. Can it be absorbed into your mortgage now?

I don't think you were necessarily ripped off, it is likely a mechanism they used at the time to offer larger borrowing for house purchases than you would have attracted otherwise.

The mistake was not clearing this ball and chain when you sold your old house.

The only other options are to default and go for payment plans with the resultant destruction of credit files.

redwestie

The 26k was to top up the mortgage at the time and i don't have anything to sell unfortunately!

I have read on a few sites that the max term for an unsecured personal loan is 7 years? The one i have is for 35! Can they do that?

I didn't buy another house after this. We rent now

ILW

redwestie wrote: »

The 26k was to top up the mortgage at the time and i don't have anything to sell unfortunately!

I have read on a few sites that the max term for an unsecured personal loan is 7 years? The one i have is for 35! Can they do that?

I didn't buy another house after this. We rent now

There is no legal limit to the term of an unsecured loan. Just most lenders tend not to go over 10 years or so.

iolanthe07

You really have been shafted. A top-up loan of £26K over 35 years is just crazy, and explains why you're going to pay back so much. As Apples implies, these loans were never meant to go the full term - rapidly increasing house prices would see them off in no time and you would pay it off when you moved up the property ladder. Northern Rock were just about the worst of these shyster lenders and they thought the good times would roll for ever. The lending was totally irresponsible - how were you supposed to know better than them that a crash was about to happen?

I would try offering them a much reduced payment and see what they say. If you really can't afford the payments, would bankcruptcy be out of the question for you? It may be worth taking some advice on this possibility, because otherwise you're going to have this debt round your necks for decades.