Northern Rock

jkka

Hi all

In around September 2005, I bought a house on a 100% mortgage from Northern Rock. The value of the property was 88.5k.

That was on a fixed interest rate of (what I remember to be) 5.5% for five years and when that ended, it went on to variable, which actually brought the payments down a bit.

Fast forward to this year, a month or so ago... NRAM are hassling me to change lenders because the interest rates may change and they want to help me out and get a better deal. That's fine. Though, one thing that had never struck me before is that I've barely scratched the surface of the capital.

If I were to change lenders now, according to NRAM, I'd have to find someone to lend me 86k, as my nearly 10 years worth of payments seem to have just gone to interest.

When I spoke to them (as they were ringing constantly, trying to get me to engage with them) I brought this up and the lady was very understanding that it didn't seem right.

This is no interest only mortgage, it's capital too, yet, I'm feeling like I've thrown all that money away.

Basically, my payments for 5 years were £550 per month, the after the fixed rate ended, they shifted to £475.

So, I'm in a hole because it appears that I've paid no capital off (everyone I know with a mortgage has paid off more than I have in the first six months of theirs) and now they want me to move to another lender, which is going to basically write off most of my last 9.5 years worth of payments.

This doesn't seem right to me and I'm still waiting for them to come back to me about why this is the case. Am I being unreasonable or should I expect that I would have paid off more than 2.5k over nearly 10 years?

What this mortgage has effectively done is mean that I can't move until I have paid enough capital off, or I lose money. Worse than that, moving to another lender effectively writes off nearly ten years worth of payments. I had friends that bought at the same time with different lenders and they all had the same kind of deal, none of them are in the same situation.


Thanks.

andyfromotley

You must have paid off more than 2k in 10 years??

What do your mortgage statements say?

RavingMad

Assuming you were on a 25 year repayment mortgage, which sounds right given payments of £550pm @ 5.5%, I work it out to be near £50k balance outstanding.

What paperwork do you have to hand?

jkka

I don't have a statement to hand, but from memory the last statement I had matches what they are asking for. I've never been the best at going through my statements, I've just trusted that things were being paid off. Naive for sure

It looks like the interest takes most of the money and when I quiered the figure, I was told that the mortgage concentrates on interest for a certain period (which NRAM couldn't tell me details of) and then concentrates on capital. I was told when taking the mortgage out that I would be paying capital off constantly, as the payments were split between capital and interest.

I can't believe that it's right because if so, a lot of people would be int he same boat where they want to move (house or lender) and can't because they've effectively paid just interest off, leaving them in NE.

jkka

RavingMad wrote: »

Assuming you were on a 25 year repayment mortgage, which sounds right given payments of £550pm @ 5.5%, I work it out to be near £50k balance outstanding.

What paperwork do you have to hand?

The term is 35 years. I need to dig all my paper work out. I do have the original contracts somewhere.

It would have been £550pm for five years @ 5.5% and then £475pm for about four and a half years at their variable rate (which I o seem to remember was a percent over the BoE base rate).

Rollinghills

The longer the term, the greater the proportion of your repayment that goes towards interest. But even so you should have repaid more than 2.5k worth of capital.

I would dig out those documents and a recent mortgage statement and add the information here. Maybe your initial rate was higher? 10 years ago it could have been more than 5.5% (and also 5.5% doesn't generate repayments of 550, 6.5% would be closer). Or maybe you were on interest only for some period?

amnblog

You need to wait and see what NRAM say Jkka.


Your facts here are all over the place.


The rate when you took your mortgage would have been 5.99% and the payment figures you quote do not match to the mortgage size you suggest.

TrickyDicky101

Can you report back what your original paperwork states as to:

1. Loan size
2. Term
3. Initial Rate
4. Any unsecured element (was this a 'Together' mortgage and did you borrow an additional amount over and above the secured mortgage amount)
5. Any fees added to the loan

Also, have you taken any payment holidays or missed any payments?

jkka

I gave NRAM a call and asked a few questions in lieu of my paper work. This is what I got:

1: Current figures:
Secured: sub 1: £77,006.22, sub 2: £3022.82
Unsecured: 3196.64

2: Original house price: £88,500, on a Together Mortgage.

3: Fixed interest, they couldn't tell me what the first five years were, though I distinctly remember it being 5.5%. Current interest on my secured loan parts is 4.78% and the unsecured was 3.6%.

4: Payment holidays: four in total.

5: Term: 35 years.

6: They couldn't tell me if any fees had been added to the mortgage, though I remember there being a cashback incentive that was used to pay off the solicitors fees.

I've requested full copies of the original contracts and any associated paperwork.

TrickyDicky101

Can you remember what the original unsecured lending totalled? Together mortgages allowed borrowers to borrow up to 125% the value of the house so if you took a sizeable unsecured loan and have targeted payments at that, it could explain why you appear to have paid off so little capital on the secured elements.

Also, the payment holidays will have a significant impact on the outstanding debt especially in earlier years of the mortgage.

TonyMMM

jkka wrote: »

4: Payment holidays: four in total.

If you have taken 4 payment holidays- how long were they for, in total ?

Interest would have continued to accumulate in the gaps and could well have wiped out any capital repayment you had made.