NRAM unsecured loan - payment options help!

Nick20

Hi,

I unfortunately fell into the crazy property ladder rush in early 2007 and took out a Northern Rock Together mortgage with a 25k unsecured loan. I remortgaged the property several years ago after the switch over to NRAM. The unsecured loan increasing to c 12% apr over a 30 year period. Through my own procrastination/stupidity/financial mismanagement! I have been paying almost £300 a month at this interest rate for the last 3 years as a) I could not afford to refinance the loan to a shorter term with increasing monthly payments b) was planning on paying at least the bulk of this off with the sale of the property ( it was improved considerably using the extra 25%). Over the 7 yrs I have had the loan it is still at c 25k and it feels like I am paying out each month for nothing! I am now selling the property, however due to other factors -market/short lease/building works/need to sell quickly I will effectively only break even and not be able to pay off or part pay the NRAM loan - in short I’m stuck with a 25k loan at a high rate of interest over a 30 year term. My wife is recovering from cancer and our household income has been halved. Whilst the loan remains just about affordable with a struggle, I really want to finally try and address this and pay the thing off.

Would really appreciate any suggestions as to my options - if there are any! It seems impossible to get a 25k personal loan at a manageable payment rate. If I could scrape/borrow a part payment would that be an option to pay off part of the loan as a full and final settlement?

Many thanks

longtermplanner

Who would lend 25k unsecured for a long period at a good rate? No one. It's not going to happen.

NRAM are unlikely to accept a low full & final settlement because as you say the loan is just about affordable.

Your options are basically to struggle on and repay it or to seek to set up a Debt Management Plan where NRAM are asked to freeze interest and accept a lower payment. You will have to supply income and expenditure details if you want them to agree to this. And it will wreck your credit rating. There are no easy solutions here.

Nick20

longtermplanner wrote: »

Who would lend 25k unsecured for a long period at a good rate? No one. It's not going to happen.

NRAM are unlikely to accept a low full & final settlement because as you say the loan is just about affordable.

Your options are basically to struggle on and repay it or to seek to set up a Debt Management Plan where NRAM are asked to freeze interest and accept a lower payment. You will have to supply income and expenditure details if you want them to agree to this. And it will wreck your credit rating. There are no easy solutions here.

Thanks for the reply - Yes I believe I have to accept that refinancing the loan is not an option. Debt Management Plans I assume, are based on affordability and as I say I can just about afford it whilst still paying the crucial bills - so again I think not an option. It appears I'll be stuck paying this off over the next 23 yrs - what a costly mistake to make....