Northern Rock - 'right to consolidate'

Chrissy3

I have 4 buy to let houses mortgaged with Northern Rock (and 1 with bank of Ireland). One became empty and I decided to sell. I bought it in 2006 for £90,500, putting a £10,000 deposit down. I have sold for £90000, £500 less than I bought it for, so will get back about £7,800 of my deposit once estate agent and solicitors fees are deducted. That's ok with me. I provided my December 2016 annual mortgage statement for this house to my solicitor, showing about £80,300 plus redemption fee of £250 to pay, and she got a further one from them in February 2017 with the same figures. We are now ready to exchange, so my solicitor has contacted Northern Rock for a final figure. She has just been told by Northern Rock that they will exercise their 'right to consolidate', and a senior member of staff will contact her tomorrow to explain what this means, as the person she spoke to wasn't sure of the details. I can find nothing in northern rock's annual statements or original mortgage paperwork or any subsequent correspondence about this. Goggle searches returns old discussions about UKAR and Mortgage Express that indicates I may need to sell all my properties at the same time - surely that can't be right? (the others may make enough to repay the mortgages between them, but I doubt I'd get the deposits back on them at this point, but all have long term tenants in them, one is my godson who I would have dearly loved to sell the house to at some point in the future). Has anyone any experience of this and what my options could be? thank you

TrickyDicky101

Does it possibly mean they will retain all monies from the sale (presumably after deduction of fees/selling costs) and reduce your outstanding loans to them by the same amount?

glosoli

I remember reading about this in books a long time ago, however I understand that they will take any left over equity to reduce the balance of the other mortgages. Effectively they are looking to reduce their loan book. So essentially, you will access all of the equity once the final property has been sold, as the balance of this mortgage will be reflective of the lump sum payments made through the other sales.

I am trying to find the book where I remember reading about it, will let you know.

Thrugelmir

UKAR has most likely sold the mortgages on your properties onto another lender. Now they simply act as administrator for that lender. The "Right to Consolidate" is perfectly legal unless expressly forbidden under the terms of the original mortgage offer and allied documentation. BTL being business lending as opposed to residential (consumer) mortgages. As a result it's possible that will seek to use the equity left. To reduce the other remaining mortgages and as a consequence their exposure. As they don't want LL's to offload all their good property taking with them the money. While leaving the lender with the remaining poor quality assets and insufficient security for the debt.

Chrissy3

thank you, I hope that's what it must mean as I can't see how I can sell them all at the same time, and at the moment this is the one that's empty. Nothing on NRAM site (this is what northern rock became) refers to it under the 'redeeming your mortgage' section. I think I'll need to speak to them myself tomorrow depending on what they tell my solicitor.

minimike2

On the plus side, will the reduction of that remaining equity be sufficient to reduce the LTV of another loan down enough to remortgage it elsewhere on more favourable terms?

Something to bring up in the conversation - If they apply it equally across all accounts it may not, but it would be in their interests to put it all against one if it means you can move the mortgage elsewhere.

Chrissy3

thank you that's a very good point and I hadn't thought of that! I will ask them if I can put it all against one property, the one my godson is in, (I'll tell them its the last I would sell -it probably is actually - that would also save them moving money around properties as I continue to sell the rest over the next 4 years). Then that will in the future give godson a chance to buy it off me at a reasonable price (although I guess if I clear the debit on it they won't be too bothered what I sell it for so long as its not a obviously below market price). Thank you so much for that suggestion.

silvercar

Chrissy3 wrote: »

thank you that's a very good point and I hadn't thought of that! I will ask them if I can put it all against one property, the one my godson is in, (I'll tell them its the last I would sell -it probably is actually - that would also save them moving money around properties as I continue to sell the rest over the next 4 years). Then that will in the future give godson a chance to buy it off me at a reasonable price (although I guess if I clear the debit on it they won't be too bothered what I sell it for so long as its not a obviously below market price). Thank you so much for that suggestion.

Given that they are reducing their mortgage book, they are probably not going to be impressed that it would be the last one that you intend selling, in fact the opposite may be music to their ears.

They won't be bothered what you sell a property for as long as the debt is repaid.