Northen Rock cashback Mortgage Rates Really High Yikes!!!!!

formidablelady

Hi I have got a cashback mortgage with the dreaded Northern Rock. Rate is 7.8% and we are paying £1727 a month yikes! :eek: Do you think I would get

anywhere if I ask for a mortgage review?

Gorgeous_George

How long is the tie-in?

£227,500 over 25 years (repayment mortgage). Is that right?



GG

formidablelady

Thanks George. Yes your assumptions are correct. Tie in is 10 years. Been paying it back only around 3 years. I know I have made my bed so now I have to lie in it. But just wondering if it was worth a shot being cheeky.

Gorgeous_George

Anything that is free is worth a shot. A mortgage review is free.

If your circumstances change and your credit rating improves, it's also worth looking to change lenders. Again, looking is free.

£1,566 with a Nationwide lifetime tracker over 22 years saves you £161 per month (may be some fees involved). Is it worth moving? I don't know the fees.

GG

MarkyMarkD

What ARE you talking about, GG? This isn't a sub-prime mortgage. It's a product with a very high cashback and then tied in at SVR for a very long time.

It will almost NEVER be financially worthwhile to remortgage away from a product like this as the ERCs are set to make it thus.

A mortgage review with NR is only free if you don't switch products.

Regarding the OP's post, the rate on this product isn't "really high". It's NR's SVR (or something very like it) which is what you agreed to pay when you bought the mortgage - and presumably you thought it was worth paying a relatively high rate for a long time so you could have the huge cashback.

You can be as "cheeky" as you like, but you won't avoid paying the ERC on your product - and nor should you.

Gorgeous_George

I didn't suggest that you should avoid paying anything that you have signed up for.

However, you should revisit your options occasionally (and for free). More regularly if your credit worthiness improves.

GG

formidablelady

GG its wasn't a sub prime mortgage. MMD I am not sure what ERC stands for. I suppose I was hoping that someone out there would have tried this. I thought that I could go in and say that I was thinking of taking my custom elsewhere due to loss of confidence in them. I could ask them what I would have to repay and hope they may be a bit jittery!

dunstonh

ERC = early repayment charge.

I suppose I was hoping that someone out there would have tried this. I thought that I could go in and say that I was thinking of taking my custom elsewhere due to loss of confidence in them. I could ask them what I would have to repay and hope they may be a bit jittery!

There is no reason for them to become jittery as they would get back what you owe them plus the correct penalty for you breaching your contract.

NR is effectively on wind down now and companies can actually make more profit on that basis then they can when selling new business.

MarkyMarkD

GG, for the second time it wasn't a sub-prime product.

Formidable - ERC = Early Repayment Charge = the percentage of the loan you'll have to pay because you settled the loan early.

They won't give a stuff if you want to repay, formidable - they make more money if you repay, and pay the ERC, than if you keep paying their SVR. And NR are short of funds, not short of mortgage assets, so if anything you'd be helping out their current situation.

Gorgeous_George

And you could improve your own finances too.

MMD. I never said it was sub-prime so I'm a bit

The deal is, the OP can look to borrow elsewhere. This will cost X pounds over the term of the mortgage. Compare that with the cost of staying put (Y pounds). If it is cheaper to move (X < Y) then move. Otherwise stay with NR.

Simple?

GG

MarkyMarkD

Gorgeous_George wrote:

If your circumstances change and your credit rating improves, it's also worth looking to change lenders.

It's this bit which made me and others think you were implying the reason the rate was high was because it was a sub-prime loan, which it isn't.

Apologies if that's not what you meant.

As I have said before, I doubt very much that NR have priced this so it's economic to redeem early. They are not stupid.