Northern rock loan over £25,000

CSC1

I haven't posted since 2011 - wow.

What puzzles me about the Court of Appeal decision and potentially in the lead up / original decision is the matter of intent. Not sure this changes anything but.....

- the loans of £25,000 to £30,000 were invariably provided to allow the borrower to pay the "deposit" or a significant proportion of that deposit to make up for the shortfall of the 5% (100% - 95%) needed for the mortgage (secured loan) element

- I remember being told by NR that I was, in essence, only borrowing an additional £17k, as I was using £13k of the £30k for a deposit which reduced my secured loan liability.

- this was of course all a con to allow NR to "technically" not being offering 100% mortgages, when in fact that's exactly what they were doing and more.

I just wonder (and admittedly this falls into the area of miss-selling rather than contract law) but if it were proven that all of the 41,000 used every penny borrowed in excess of the £25,000 unsecured borrowing to fund their deposit, then NR was knowingly providing 100% secured mortgages and potentially that loans of £25K+ were never really in existence as their sole purpose was to cover the 5% mortgage shortfall. Could it therefore not be argued that (for me anyway) my loan was really only for £17,000?

Not sure on this, but it goes to "intent" and "intent to deceive" and I doubt the real use of the loan(s) have been examined.

Thoughts?

coxj2901

badobsession81 wrote: »

coxj - maybe you've just gone outside an early repayment charge period?

I'm not sure but the original loan was for 25 years I think. I borrowed around £175k on the mortgage and £30k unsecured. I sold the property in 2012 and then had the hike rise in interest rate to 12.9% on the unsecured loan and didn't have any equity to pay it off.

I've just refinanced to pay the Northern Rock loan off at a better rate and was surprised that the balance had changed by ~£3.5k within 12 days!

Knowing my luck it will be an administrative error and I'll have to pay the remainder!

nickyc1

Interesting point CSC1


Was there anything stopping them offering 100% mortgages though?

NorthernRockVictim

nickyc1 wrote: »

Interesting point CSC1


Was there anything stopping them offering 100% mortgages though?

Don't think so, some were offering 125% mortgages back in the bad days!

CSC1

I don't know, but what this constitutes is a lender saying that I am going to lend you £220k against £200k security. I am going to structure the loans £190k secured and £30k unsecured. By doing £30K unsecured, the lender immediately:

- introduced a buffer between the secured loan and the security (making their loan book look better) and

- issued a £30k loan which fell outside of the limit for CCA protection for the consumer

I don't think this is over, but also I am no legal expert and am not sure that the point I am making has any bearing on the Court of Appeal decision.

nickyc1

It could certainly be argued that your loan was in effect less than the £25K


Does anyone have any background as to how/why the Together product came about if they could have offered 100% mortgages?

lizards

Yes, they made us borrow over the 25K (it was going to be under) so we had a 10% deposit on our 150K home rather than 5%. Seemed odd at the time but we were so excited to have our own place we didn't question it as it seemed to make no difference whatsoever. Seemed like just a case of semantics and the bank being a law unto itself (ha ha, how true is that with hindsight?).

Of course I would have questioned it more had it been made clear we would then not be protected by the CCA. Some of the 30K was existing CCA-protected debt which was ported over to the Northern Rock unsecured loan - I would have argued against their suggestion as I was taking my debt from CCA to non-CCA protected. Who knows if they still would have given us the mortgage if we had insisted on keeping it under 25K?

There is no way to know and they can't prove we would have taken it out in spite of full knowledge the lack of protection any more than we can prove we wouldn't have.

Lippyx

I needed 150k for the house, we got 125k on the mortgage and the rest from the loan plus "a little bit extra for work needed" on said house.
I have always wondered if this would be classed as irresponsible lending as surely its putting people at a higher risk by suggesting this was a good way of making up the short fall... Something a lot of first time buyers (like me) would jump at, and without being warned of the risks of doing so by NRAM or the solicitor you were paying, that that must be irresponsible too?

NorthernRockVictim

Guys - This is a whole different issue and one which I believe is irrelevant and could never stand up in court. It could have been irresponsible lending, but it also be classed as irresponsible borrowing, I put my hands up to being an irresponsible borrower at the time.

We need to stay focused on the job in hand:
1. Ask them how much the full legal costs were.
2. Ascertain who chose both side's solicitors.
3. Put effort into getting massive media exposure, more the better. I've contacted a National Newspaper and will be writing to more soon. Suggest everybody does the same, throw enough mud at a wall and some will eventually stick.
4. Try to force them into funding Supreme Court of Appeal, with a sharper firm of lawyers.

NorthernRockVictim

And don't forget that they will be reading this, so they'll know what's coming their way soon!