Secured loan when remotgaging...

Eastlands70

Can anyone help out on this? I tried to remortgage to another lender just before Christmas. Reason being that I'm paying 4.54% with NRAM and was after a better rate. In addition to this I also have a secured loan taken out with NRAM when I bought out my ex-partner which is currently 4.44%.


I knew I didn't have much equity in the house but saw a fantastic 90% LTV 3 year discounted rate with the Leek BS which would've seen me save about £100 a month. Unfortunately, the application fell through when the surveyor's valuation fell well short of what I was expecting meaning that they could only lend me about 94.5k as opposed to the 110k I was looking for.


However, this 110k was roughly made up of around 95k mortgage and 15k secured loan. I was under the impression at the time that I had to move both the mortgage and secured loan over but am now wondering if it would've been possible just to move the mortgage over to Leek BS and keep the secured loan with NRAM, which in turn would've given me the opportunity to at least get the main part of the debt at the better interest rate.


Is this something that can be done? Thanks in advance

dimbo61

" keep the secured loan with NRAM "
The secured loan bit means that NRAM would have first charge on the property!
Not going to happen as NO Lender would have a second charge for a Main Mortage

Eastlands70

dimbo61 wrote: »

" keep the secured loan with NRAM "
The secured loan bit means that NRAM would have first charge on the property!
Not going to happen as NO Lender would have a second charge for a Main Mortage

I appreciate that mate, but would it be possible for NRAM to accept second charge for the secured loan?

antrobus

Eastlands70 wrote: »

I appreciate that mate, but would it be possible for NRAM to accept second charge for the secured loan?

All things are possible, I suppose. But I'm of the opinion that NRAM will say 'no'.

With debt of 110k and a valuation of £105k you have negative equity. It is almost impossible to remortage with negative equity.

Eastlands70

antrobus wrote: »

All things are possible, I suppose. But I'm of the opinion that NRAM will say 'no'.

With debt of 110k and a valuation of £105k you have negative equity. It is almost impossible to remortage with negative equity.

No harm in asking them I suppose.


Re the negative equity issue, the point I was raising was that if NRAM allow me to keep the secured loan with them and move the mortgage only, would Leek BS assess the LTV based only on what I wanted to borrow from them (approx 94.5k) or take the amount I owe on the secured loan into account as well?

Brock_and_Roll

To be perfectly honest, by any historical measure a mortgage rate of 4.54% for someone in a negative equity position is an absolute bargain.

Obviously no harm in trying to go for a better rate but highly unlikely that NRAM would agree to keeping the secured loan as it would put them in a worse position than they were before from a security position.

Best long term bet is to throw every penny you have over the next few years to get yourself back in positive territory where the LTV is less than 90%.

Thrugelmir

With a second charge only. NRAM would at the very least increase their interest rate on the secured loan element. To reflect the higher risk. That's if they are willing to play ball at all.

While a 3 year rate may appear attractive. Where does that leave you in 3 years tome? Nor is remortgaging totally cost free. So the actual gain may not be as large as you think.

Eastlands70

Brock_and_Roll wrote: »

To be perfectly honest, by any historical measure a mortgage rate of 4.54% for someone in a negative equity position is an absolute bargain.

Obviously no harm in trying to go for a better rate but highly unlikely that NRAM would agree to keeping the secured loan as it would put them in a worse position than they were before from a security position.

Best long term bet is to throw every penny you have over the next few years to get yourself back in positive territory where the LTV is less than 90%.

I spoke to NRAM and you're right - they said I would have to move the whole lot if I wanted to re-mortgage.


I'm currently over-paying by about £80 a month and anticipate that I could be close to the 90% LTV within a couple of years so I'm not too far off time wise but was concerned about any possible interest rate rises in the meantime.

Eastlands70

Thrugelmir wrote: »

With a second charge only. NRAM would at the very least increase their interest rate on the secured loan element. To reflect the higher risk. That's if they are willing to play ball at all.

While a 3 year rate may appear attractive. Where does that leave you in 3 years tome? Nor is remortgaging totally cost free. So the actual gain may not be as large as you think.

When I did the maths, and factored in all the associated fees for solicitors, valuation, and cost of mortgage product it was still a very good deal. Plus, of course, paying a lower interest rate for 3 years wouldn't just mean a lower monthly payment but also more money would be coming off the bottom line.

dimbo61

All you can do is overpay as much as possible every month.
A long hard slog BUT the more you overpay the the less debt you have and more equity you build up

PeacefulWaters

I suppose your other option would be to try and get a sub-5% unsecured loan to pay off the secured loan with. Shorter term would mean higher payments though.

You might not get the lowest advertised rate from an unsecured lender either.