Is this my only option?

Tink_04

Hi just want to check we are doing the best thing re our mortgage.

We had a NR mortgage of £94000 with a unsecured loan of £15000.

Mortgage is now with NRAM and we need to sell.

House has been valued at £89000 and we have been overpaying the loan part so it now stand as £10000.

If we sell the loan interest jumps to 9% we still need to pay some of the mortgage so we break even.

We have £7000 which way is best to pay it?

All loan? Split it? Or all mortgage?

Thanks x

kingstreet

9%?

Are you sure?

AIUI, the rate for a de-linked Together unsecured loan is SVR + 8%, or 12.79% (12.78% if you qualify for the loyalty discount.)

Tink_04

I'll have to double check as mat have read it wrong then, am I best throwing it at the loan then as we have been doing?

Tink_04

Hi can anyone help? Sorry my 1st post wasn't very clear.

I'm just wanting to know if paying the loan off 1st is the only way to do this so we can break even and sell? We will also have to pay a little off the mortgage still but should I tackle the loan first?

Thanks for your help!

Kazza_Monkey

I'm not a financial expert so dont take my thoughts too seriously:) If I was in your position I would look at paying the loan off first as it has the highest interest rate and also will affect you afforability calculation for a mortgage if its still left outstanding once you have sold the house.
If any one else out there has any thoughts on the contrary to me please bear them in mind.

amnblog

The point of the unsecured loan was to enable you to reduce the risk of negative equity should you wish to sell.

In this case, if you sell at £89,000 and use extra cash to clear your mortgage you are left with the loan. NRAm will let this loan run, but as KS says your interest rate on it rises.

If you pay £7,000 off of the loan this does not effect the mortgage, you are still in negative equity, then if you try to sell the lender will want the shortfall from you.

Kazza_Monkey

amnblog wrote: »

The point of the unsecured loan was to enable you to reduce the risk of negative equity should you wish to sell.

In this case, if you sell at £89,000 and use extra cash to clear your mortgage you are left with the loan. NRAm will let this loan run, but as KS says your interest rate on it rises.

If you pay £7,000 off of the loan this does not effect the mortgage, you are still in negative equity, then if you try to sell the lender will want the shortfall from you.

This is why I'm not a financial advisor - good sound advice from amnblog.