£349 fee for loan with Northern Rock

suki43

Hi Guys,

I'm considering getting a personal secured loan with the Northern Rock due to the fact that I can make overpayments and there is no early repayment fee.

I have been accepted for the loan of £7500 - they told me I can borrow up to £39820!!! Certainly made my eyes pop out!!

Anyway, it's a variable rate of 7.84% which I can align with my mortgage interest rate in January when the fixed rate term ends. The reason for looking for a loan is my 0% credit card with Capital One is going to end and jump to 17.9% next month, which I obviously want to avoid. I have tried to apply for another 0% card but was declined, possibly because I got an M&S and More card in April, so it's too soon.

The only thing that puts me off is this fee of £349 - an administration fee. Can they really charge that much? Is there some way I can reclaim this as being unlawful, like the mortgage exit fees? It just seems ridiculously high.

Any advice would be appreciated on this, or if anyone knows of a better deal, I'm all ears.

Many thanks

chilli_dog

Is it a bit like another mortgage? much more work to do, valuation fees and land reg fees etc. not excusing it just trying to work it out.

tom188

Putting a charge on your home is not cheap.

The only thing that puts me off is this fee of £349 - an administration fee. Can they really charge that much? Is there some way I can reclaim this as being unlawful, like the mortgage exit fees? It just seems ridiculously high.

If you don't want to pay it, don't take the loan.

suki43

chilli_dog wrote: »

Is it a bit like another mortgage? much more work to do, valuation fees and land reg fees etc. not excusing it just trying to work it out.

No, Chilli, there are no such fees. It's a personal secured loan against my house. The only fee is the £349 which I can pay up front or add to the loan.

Just some extra info too, the loan is over the minimum term of 5 years as would be £157.20 per month without PPI. My current minimum payment on my Capital One card is £253 although I actually pay £700 per month, as I have been very aggressive in getting it down, and I plan to continue to pay at least £700 a month on a loan. So I plan to actually have the loan paid off by May 08 at the latest.

Are there any other products out there which would be better for me, and given that I want to pay the loan off quickly, is it less critical whether I get a secured or unsecured loan?

Phantom_Flan_Flinger

The 'product fee' as NR call it, is not hidden. It's their standard fee and it would have been in the T&C's of the loan for you to see before you signed anything.
It's a case of, if you don't want to pay it, don't take the loan.

The reason they'll offer you up to £39000 is because it is a secure loan and it should work out somewhere near the equity you have in your house.

Do you have a poor credit rating? Is that why you chose a secure loan?
An unsecured loan would have been much better and the rates are usually fixed over the term of the loan, especially with NR.

globalds

Suki I have just taken up an offer from virgin for £7500 this offer is untill April 2008 .I can't gaurantee you will get this .but what you are being offered is so far off from here .http://forums.moneysavingexpert.com/showthread.html?t=506580 That my advice would be look a bit harder and make ask for a bit more.

chilli_dog

Is the loan solely to pay of your credit card & M&S Card? Your paying a lot each month at them anyway, well done you!!!!

If you dont need it for anything else could you not last out till May '08?

MarkyMarkD

Like with any lender, they can charge you anything they like as an up-front fee if they disclose it.

If you want the loan, you have to pay the fee. It's not illegal (or even unlawful).

If you work out the effective interest between now and January, £349 + 7.84% is a lot of money on £7,500. It's definitely not an efficient way to borrow that relatively small amount.

If you borrowed the £7,500 somewhere else for a short period, the problem is that the repayments will be huge. So I can sort of see how you've got into this situation.

But £7,500 x 7.84% x 6 months = £294; the £349 fee more than doubles the interest rate to over 17%. I am sure that you can do better than that - maybe a balance transfer to another credit card. Even with a 3% fee or something like that it would be way cheaper than the NR loan.

Or finance the £7,500 over the period you actually feel you will repay it over, using an unsecured loan. You can get rates as low as 6.3% which are fixed (better than variable if you think rates will rise) and you won't have any up-front fees to add on to that.

jonesMUFCforever

I agree a loan of £7500 or more to someone with an A1 credit file will get the best rates on a personal loan.
As long as they accept overpayments you will be better off doing this rather than securing the debt against your house.

Cough Cough there are ways round not paying early settlement fees if you pay it off early.
Search these boards for the answer¬

Mark7799

suki43 wrote: »

No, Chilli, there are no such fees. It's a personal secured loan against my house. The only fee is the £349 which I can pay up front or add to the loan.

A personal loan secured against your house is a form of mortgage.

THe mortgage is the secured part of it - not the loan itself.