NRAM Unsecured Loan

dunchorler

Hi, I have one of these hanging over me like a black cloud from my first house purchase (back in the days of 125% mortgages!).

I have since sold the property and paid off the secure part of the loan but still have approx £27,500 left to pay. This is at an interest rate of 9.79%!

Does anyone have any ideas of how I can get rid of this loan - it is going to cost me a fortune in the long run. I can currently comfortably afford the repayments of approx £250 per month.

Any help would be greatly appreciated.

Many thanks,

Duncan.

lopsyfa

At the moment you are mainly paying the interest every year with little capital repayment. So it will take you a long time to clear with lots of interest （many multiple of the debt).

Basically there are two things you can do 1) increase your monthly payment so you pay more of the debt each year rather than just paying interest or 2) reduce your interest rates. Doing both will achieve better/faster results. Other more knowledgeable people on this forum can tell you how to shift the loan to better interest rate.

PeacefulWaters

Overpay.

Get a loan elsewhere at a lower rate (if you can( and repay it.

Pixie5740

How comfortably can you afford the £250 a month?

If you keep paying £250 a month it will take you over 23 years to clear that loan. If you can up your payments to £360 a month it would take the term down to 10 years.

There are lenders out there offering large (up to £40k) personal loans however the maximum terms is 84 months so that would mean greater monthly payments than you are making just now and the representative APR aren't all that much better than you currently have with Northern Rock. For example, the representative APR for a £27,500 loan with Sainsbury's is 8.8%. Over 60 months your* monthly repayments would be £539.32. If you took the loan over 84 months your monthly repayments would be £435.

So my advice is to overpay your current loan as much as you can. Once the outstanding balance is below £25k you could look at taking out a loan elsewhere as that's when the rates (usually) get better.


*assuming you were a) successful in getting the loan and b) secured the representative rate.

stuart30

Pixie5740 wrote: »

How comfortably can you afford the £250 a month?

If you keep paying £250 a month it will take you over 23 years to clear that loan. If you can up your payments to £360 a month it would take the term down to 10 years.

There are lenders out there offering large (up to £40k) personal loans however the maximum terms is 84 months so that would mean greater monthly payments than you are making just now and the representative APR aren't all that much better than you currently have with Northern Rock. For example, the representative APR for a £27,500 loan with Sainsbury's is 8.8%. Over 60 months your* monthly repayments would be £539.32. If you took the loan over 84 months your monthly repayments would be £435.

So my advice is to overpay your current loan as much as you can. Once the outstanding balance is below £25k you could look at taking out a loan elsewhere as that's when the rates (usually) get better.


*assuming you were a) successful in getting the loan and b) secured the representative rate.

Im not doubting you..but just an extra £110 a month slashes the term by 13 years..:eek:

Think im going to start over paying my very small (by comparison) loan...:beer:

Clive_Woody

stuart30 wrote: »

Im not doubting you..but just an extra £110 a month slashes the term by 13 years..:eek:

Think im going to start over paying my very small (by comparison) loan...:beer:

Have a play around with the overpayment calculator linked below, it's stunning how much you can save on loans and mortgages by making overpayments...and you can be debt free much sooner :money:

http://www.moneysavingexpert.com/mortgages/mortgage-overpayment-calculator