Missold northern rock together mortgage?

omenchild

Hi all. I'm after some advice please. Around 7-8 years ago myself and my wife decided to find out how much deposit we would need to save before thinking about a mortgage. We went to an independant broker without a penny to our name, and by the time we came out we had a 107% mortgage offer, including borrowing extra to pay off our relatively substancial debts! Within a few weeks we had found a house and a few months later had bought it. We borrowed £132000, with £20000 of it as an unsecured loan to run alongside the mortgage and £7000 just to pay off debts etc. What we didn't realise was the problems of being instantly in negative equity, and the fact that because of that no other mortgage companies would touch us and that we'd be seemingly stuck with northern rock and their variable mortgage rate forever! I don't remember be explained the fact that if we take the mortgage elsewhere but leave the unsecured loan with northern rock the loan rate will jump to over 12% either. Is this grounds for a misselling? Or were we just silly and naive? Any info or advice will be recieved gratefully and thankfully!!

dunstonh

What we didn't realise was the problems of being instantly in negative equity, and the fact that because of that no other mortgage companies would touch us and that we'd be seemingly stuck with northern rock and their variable mortgage rate forever!

How did you not realise that borrowing more than the house was worth meant that you were borrowing more than the house was worth?

I don't remember be explained the fact that if we take the mortgage elsewhere but leave the unsecured loan with northern rock the loan rate will jump to over 12% either. Is this grounds for a misselling?

Your memory is not grounds for complaint. Documentation is King and this is a post October 2004 case so you would have been issued a key features illustration laid out by the regulator which states the terms in clear language.

Or were we just silly and naive?

Yes. However, you were not alone. Lots of people did the same during the credit boom years. Just because something is silly with hindsight does not mean it was mis-sold though. If you had no deposit and no money to pay the bills, you had two options. Save until you do or borrow the money. You borrowed it. You must have knowingly done it. NR mortgages were designed for people like you. We can look on it as foolish but it was just a sign of the times

pleasedelete

What rate do you pay? We have a northern rock mortgage taken out 8 years ago and the rate is low. Our bank is desperate for us to move it but they cant get anywhere near the NR rate.

roonaldo

What mis-selling. You mean you borrowed too much and now you regret it? You have said you borrowed extra to pay off debts, this and your lack of deposit isnt really a fault of Northern Rock.
Why are you in negative equity when some of the borrowings is unsecured and house prices are going back up? The fact that house prices previously went down and you may be been in negative equity for a while is not mis-selling.

7-8 years ago would be a regulated mortgage sale, so the rates will be clearly marked on your Key Facts Illustration and Mortgage Offer, so you would have been told the variable rate based on the information at the time. Unfortunetley the adviser wouldnt have had a crystal ball and knew of the future credit crunch, that Northern Rock would all but go down the pan (due to their high risk lending) and then later they will hike their variable rates.

There are 2 issues here -
1. You borrowed too much.
2. The rate is now high

I think you need to take some responsibility for this, sorry i cant say anything particularly positive or what you want to hear.

roonaldo

pleasedelete wrote: »

What rate do you pay? We have a northern rock mortgage taken out 8 years ago and the rate is low. Our bank is desperate for us to move it but they cant get anywhere near the NR rate.

It's the rate on the unsecured loan part of the borrowing that is high, not the actual mortgage part of the borrowing.

omenchild

Thank you all. It's all kind of what I expected to hear. But it's always worth asking the question of people more in the know than us. As it stands it's affordable for us at the moment, it's just the feat of the bank of England suddenly putting the interest rates up a huge amount that scares us! Thanx for the info!