NRAM unsecured loan at 12.79% <sob>

notaclueandfloundering

Hi all,

I'm new here but could do with some help.

In Oct 2007 my soon to be ex husband and I took out a 110% together mortgage £120,000 and unsecured loan of £30,000 with Northern Rock - hindsight is a wonderful thing.

7 years on, we have moved a few times and have a new mortgage with a new lender but still have this nightmare unsecured loan of (now) £25,300 but as we have a new mortgage provider the interest rate is a whooping 12.79% and it is in both of our names.

I have called to discuss with them separating the loan and attempted to change it for a better deal but with no joy - computer says no basically. As I have a new mortgage, my current lenders won't loan me anymore to cover the NRAM so I feel totally trapped.

Is there anything i can do? Currently paying £400 per month (should be paying £311 but am overpaying, is this wise?), never defaulted but still have 28 years left to go. It just seems incredibly unfair to be so stuck.

I know we signed it, but is there a solution?

Any help or advice gratefully received.

Yours naively...

Gaz83

It's always wise to overpay. And although it might seem unfair now, those were the terms you were (presumably) happy to agree at the time. Lenders are under no obligation to renegotiate loans.

Your options are limited. You could apply for a loan elsewhere and hope you get offered a cheaper APR, but any new lender will assume the worse - that you won't use the £25,000 to pay off the existing £25,000, and thus end up with £50,000 of unsecured debt.

Is there any way you could overpay more? Even an extra £100 per month could save you years off the term.

Thrugelmir

notaclueandfloundering wrote: »

Currently paying £400 per month (should be paying £311 but am overpaying, is this wise?), never defaulted but still have 28 years left to go. It just seems incredibly unfair to be so stuck.

Overpay by whatever you can afford to. While it seems unfair. You can't turn the clock back to change decisions you both made years ago.

notaclueandfloundering

Forgive my naivety, but how would i figure that out?

If, for example, i could afford to pay £500 per month, how do i work out how much that would knock off the term?

Many thanks for your replies - it's as i thought.

Babbawah

The thing is with greed, it will always bite yer @Rs£ eventually :-)

Pixie5740

notaclueandfloundering wrote: »

Forgive my naivety, but how would i figure that out?

If, for example, i could afford to pay £500 per month, how do i work out how much that would knock off the term?

Many thanks for your replies - it's as i thought.

Try using the snowball calculator to play around with overpayments to work out the term of your loan.

http://www.whatsthecost.com/snowball.aspx

Does your NRAM loan have any early repayment charges?

notaclueandfloundering

Massively helpful response there Babba, thanks so much.
We've all made mistakes, mine was the naivety of youth but I'm attempting to fix it now.

Many thanks Pixie, I will check out the link and no, there are no early repayment charges

Gaz83

Do you have savings? Are you saving anything per month just now?

Thrugelmir

notaclueandfloundering wrote: »

If, for example, i could afford to pay £500 per month, how do i work out how much that would knock off the term?

Around 6 years (72 months) to repay the debt totally.

A few months of belt tightening could make a real dent if you could find some more money to pay off the debt.

notaclueandfloundering

No savings currently as just finished paying off fees and credit cards but soon to have £200 additional freed up each month. If that link is correct and I pay that towards nram, making it £600 pm, then I'll pay the loan off in just over five years, which would be amazing!!

DaveTheMus

Gaz83 wrote: »

Do you have savings? Are you saving anything per month just now?

[STRIKE]
This is something I will echo....

There is no point in having any savings, apart from a rainy day fund, while you're spending lots on interest. Use any savings you have and any money you're saving to clearing the unsecured loan.[/STRIKE]

Answered in post 10.