Re: NRAM Together Mortgage & an unoccupied house!

Tuck1705

Hi everyone,

I am after some advice regarding an NRAM Together mortgage which I have been paying into since 2007.

The mortgage was for 115% of a property originally bought for £172,000 (£165K mortgage and £16k loan on top). We are on their SVR paying £761 a month, well i say 'we' but we moved out 18 months ago and rent the place for £650 per month. £50 goes to the agents that look after the place (we now live 180 miles away so cannot manage it ourselves) so we make up the mortgage to £716 with £116 per month plus also another £40 on insurances.

The mortgage is interest only and the house on last value was worth only £155K.

Problem - our tenants moved out and we are struggling to get new ones! We cannot pay the whole mortgage ourselves so have made part payments and are now in areas.

Anyone got any good ideas what we should do?! We may eventually find new tenants but even with them in place the house is still costing us £156 a month to maintain a negative equity status due to it being interest only.

We had thought about voluntary repossession but has anyone successfully taken the whole NRock Together Mortgage to court for irresponsible lending? I have read a lot of people who seem keen to do this but has anyone actually given it a go? We accessed the mortgage though a broker who encouraged us to sign even though the repayments and overall borrowing amount were way above our income rates & we also both had existing debts before (and still during) the mortgage.

Any input greatly appreciated.

Wh05apk

Tuck1705 wrote: »

We had thought about voluntary repossession but has anyone successfully taken the whole NRock Together Mortgage to court for irresponsible lending? I have read a lot of people who seem keen to do this but has anyone actually given it a go? We accessed the mortgage though a broker who encouraged us to sign even though the repayments and overall borrowing amount were way above our income rates & we also both had existing debts before (and still during) the mortgage.

Any input greatly appreciated.

Sorry to hear of your predicament, ultimately it is your debt, you are responsible.

What do you mean by "above your income rates"? do you mean you/the broker inflated/lied about your income?

With regards to the above paragraph, presumably you were over 18 and adults at the time of application? so could it just as easily been irresponsible borrowing from you rather than the lender, surely you were best placed to know your financial position? If the property had increased in value to £200k, would you still be complaining?

Leon_W

In what possible way did Northern Rock lend irresponsibly ? It's hardly their fault that you can't find a tenant.

The Together mortgage used pretty standard income multiples and it all had to be proved with wage slips. You wanted to borrow the money and they agreed to lend it, which isn't against the law as far as I know.

DannyboyMidlands

With a 115% mortgage you were in negative equity from day one. Nothing has changed. How did you originally plan to deal with it?

The place being unoccupied was also a risk from the day you let it. How did you plan to deal with that?

Simon_gloster

Have NR agreed to you letting it out? If not, you are in breach of the terms of the mortgage, and if found out they can call the loan in at anytime, negative equity or not.

If no consent is granted, you are silly siily people. Irresponsible lending in cout would be challeneged, quite rightly, by NR solicitors as it is you and not they who have broke the contract.

Somerset

Simon_gloster wrote: »

Have NR agreed to you letting it out?

Doubtful. When I got consent about seven years ago (before the bank/market crash) they were very picky then with LTV and rental/mortgage payment. Would only consent if there was clear daylight.

holly_hobby

Hi,

From what I can see you chose to effect a mortgage inexcess of the property value, unfortunatley the market hasn't risen, you rent it out, can't afford the mge with that on your primary residence, and are soon to be without the tenant that is effectively paying the mge!!.

If you don't have consent to let from your lender, and as Simon correctly states, you have breached the contractual terms of your mge agreeement, further more if you still have domestic blds insurance in place, this is invalidated due to the let - which is a furhter breach of your contractual mge agreement to always maintain blds ins. Simon has explained the action your lender may take if/when the discover any authorised letting.

From your figs, you are technically 10K in negative equity, if you look at the together mortgage in its design format.

That is to say 95% of your borrowings (165k) were secured on the property, with the remaining in your case 15k (20%), in effect a personal loan, albeit at the same rate as your mortgage borrowings.

The idea is, if/when the mortgage is redeemned, IF the mortgagors are unable to clear the unsecured element ie in your case the extra 15K you took, this is simply loaded to personal loan rates, and continued in a personal loan guise.

So, essentially you will have a 10k mortgage shortfall to be repaid, via personal capital, or a repayment schedule. With on redemption, the extra 15k you took (taking you to 115% LTV), taking the format of a personal loan.

You may think blow that, let them repossess .... if you take this route, although there is no longer a CML repossession shared register, such action will continue to affect your credit record for at least 6 yrs, with the lender able to pursue the shortfall debt for 12 yrs - so a course not for the faint hearted !

Of course if you can't afford the mge, have no tenants or little prospect of any ..... the writing may be somewhat on the wall !

Speak to the lender, tell them the situation, they should attempt to engage in some positive mediation - they will seek to avoid repossession, but if there is little propsect of change to your finanical circs (and the fact the property is now empty), may obviously lead them to consider the possession avenue at an earlier stage, than those issues re arrears on primary residences.

If you feel uncomfortable contacting them direct, CAB will assist where possible, and liaise with your lender on your behalf.

Hope this helps

Holly

Tuck1705

Thanks for the feedback guys.

To address some common questions in this thread:

Yes we did have consent to let from NRAM, but this was only for 1 year and unfortunately the 1 year has run out at a time when we currently have no tenants so unlikely to be renewed. We had tenants ready to go when we applied the first time round hence the positive outcome.

If we lived in the property still we'd be able to make the payments no problem. Do you think this situation would allow for a mortgage port? Only issue would be the deposit they require as we could get together only £3-4k worth of capital. Given the prospect of repossession do you think NRAM Would negotiate on deposit costs to port in order to keep the money coming in?

Many thanks for your comments

holly_hobby

Ok - so whilst it was let you had CTL - thats good. However, this has now expired - so if you did wish to continue letting, you will need to renew the consent - or the issues raised above (and discussed via Simon) come into play.

Due to the NRAM situation, they are naturally not accepting new business, which includes Further Advances to exis borrowers/new borrowing, or existing borrowers porting their current mge product. (which even if you could port would not solve the neg equity situ, as it is the mge product NOT the borrowings that are subject of the transfer).

Hope this helps

Holly