NRAM and Interest Only

myotai

Hi,

I took out an Interest Only Mortgage back in 2006 with Northern Rock. I had no say in whether I went with NRAM, just seemed to happen. Now my repayments with NRAM are still £750 per month with 18 years left and still Interest Only.

My credit rating is decimated after being left to pay everything after my partner and I split about three years ago.

I have just called NRAM to ask what help they may be able to offer.

Pretty much nothing really. As its Interest Only I cannot even extend the mortgage to reduce payments. House is currently worth much the same as it was so I am still in long term plan of making a decent profit near the end of the mortgage and paying the mortgage off.

My questions is this, am I really stuck with this now or do people like me have options in order to reduce that £750 a month mortgage....its crippling!

Thanks,

M....

Conrad

It's extremely hard to get interest only now and coupled with your credit history you would find any new lender charging you more than NRAM.

Sorry for being the barer of bad tidings.

myotai

Conrad wrote: »

It's extremely hard to get interest only now and coupled with your credit history you would find any new lender charging you more than NRAM.

Sorry for being the barer of bad tidings.

Thanks for getting back. Its really ok, I am just tired of paying so much each month. Was just hoping that there may have been a contingency for people in my situation....ah well!

loubel

Would it cost you less to rent? You say the house is worth much the same as when you bought, so is there enough equity in it to cover costs to let you sell and lower your outgoings?

Thrugelmir

If you are struggling to meet the interest payments. Then the likelihood of repaying the capital grows ever slimmer. Is renting in your locality a viable alternative?

myotai

loubel wrote: »

Would it cost you less to rent? You say the house is worth much the same as when you bought, so is there enough equity in it to cover costs to let you sell and lower your outgoings?

Not really. Its a really nice house, we were lucky when we first got it. We live in a rural part of the West Country and renting is almost as expensive. Literally only a couple of thousand in equity so far as I know.

myotai

Thrugelmir wrote: »

If you are struggling to meet the interest payments. Then the likelihood of repaying the capital grows ever slimmer. Is renting in your locality a viable alternative?

See above

opinions4u

Would renting be preferable if interest rates increased?

Every 1% increase in interest rate will add £150 a month on to your interest only mortgage payment.

If you're struggling now, I can't see how things will get better for you.

Thrugelmir

myotai wrote: »

Not really. Its a really nice house, we were lucky when we first got it. We live in a rural part of the West Country and renting is almost as expensive. Literally only a couple of thousand in equity so far as I know.

Trouble is you are only renting it now. As and when interest rates rise you'll be squeezed further to find the money to repay the capital.

Personally, I would sit down and take a hard look at my finances with a long term view. Then make a decision for the future. Optimism is great, however ideally needs solid foundations.

Try the Debt Free Wannabe board for support and advice. As anything is possible. Depending on the commitment that you are willing to give to a plan.

Let_Us_See

I don't want to depress you even more but extending the term of an interest only mortgage does NOT reduce the monthly payment. As you are only paying interest on the borrowing it doesn't matter if you have a 5 or 50 year term, the monthly payment is the same.

DesperateSusan

I'm in a similar situation ...

NRAM are only "looking after" existing accounts, they are not issuing new loans and so, they do not need to be competitive in the rates they offer.

Have a bad credit history is troublesome, too - I know - I can only see me sitting and waiting for the defaults to drop off the credit files and hope its not too late for me.

Are you able to rent a room? In my area, rooms go for £80+ a week. Its not everyone's ideal, though.

Sue