Interest-only mortgage query

Twaciekins

Hi, My husband and I were sold an interest-only mortgage right before the bust of 2008 with Northern Rock. It was a 5-year fixed interest only as my husband was a student and I was working very part-time. We were first time buyers and it was a 100% plus mortgage as well. It seemed a great deal at the time but NR went bust, became NRAM and we couldn't get off the interest only for nearly 10 years (instead of the 5). This meant we couldn't pay the capital on our mortgage. I'm starting to see posts online about reclaiming compensation for this kind of thing. I haven't seen anything on the MSE site about it and I don't want to go down the no win-no fee load of rubbish. Has anyone on MSE heard anything about reclaiming or claiming compensation from a mortgage set up like this? Especially concerning Northern Rock/NRAM?


Thanks in advance.

Samsung_Note2

Interested in replies you get as very similar situation to us.

AnotherJoe

Twaciekins wrote: »

Hi, My husband and I were sold an interest-only mortgage right before the bust of 2008 with Northern Rock. It was a 5-year fixed interest only as my husband was a student and I was working very part-time. We were first time buyers and it was a 100% plus mortgage as well. It seemed a great deal at the time but NR went bust, became NRAM and we couldn't get off the interest only for nearly 10 years (instead of the 5). This meant we couldn't pay the capital on our mortgage.

The reason you couldn't get off the IO would have your salaries and circumstances, nothing to do with NRAM.
And if you did actually have the spare cash each month for a repayment, but weren't eligible, you could have saved it in high interest accounts at a rate higher than your mortgage and paid it off as a lump sum when you did finally remortgage. Did you do that? If not, where is that money?

Twaciekins wrote: »

I'm starting to see posts online about reclaiming compensation for this kind of thing. I haven't seen anything on the MSE site about it and I don't want to go down the no win-no fee load of rubbish. Has anyone on MSE heard anything about reclaiming or claiming compensation from a mortgage set up like this? Especially concerning Northern Rock/NRAM?

Is that from other people like you who blame everyone but themselves for their circumstances ?

You were sold a mortgage? Or you bought one? I doubt they went round to your house banged on your door and forced a mortgage on you. It was your decision.

You were sold IO or is that all your circumstances allowed you to afford?
You took a 100% mortgage because you hadn't saved up enough deposit or you fancied spending the extra on new sofas?

An IO mortgage (the alternative would have been not buying which you admitted) would not have allowed you to gain from house price appreciation. To put you back in the position you would have been, are you OK for them to take that back? Seems only fair.

Brock_and_Roll

Twaciekins wrote: »

Hi, My husband and I were sold an interest-only mortgage right before the bust of 2008 with Northern Rock. It was a 5-year fixed interest only as my husband was a student and I was working very part-time. We were first time buyers and it was a 100% plus mortgage as well.
.

Op, from your other post in 2008:

"My husband and I took out a deal with NR last March - we got in just before they stopped the 125% LTV mortgages and have a 5yr fixed rate deal. We were first timers as well as my husband become a full-time uni student which is why we went for the deal. This still being the case, and since our deal doesn't run out for another 4 years (or so), do we need to look at remortgaging (which we seriously can't afford) or are we ok to stay with what we have?"

Sounds like you were pretty keen to "buy" - your post implies that your husband had a salary a the time of application but you went for the deal because you knew he was going to become a student - fair enough, so the product fully suited your circumstances. Unless you declared your plans, NR were not psychic!

In any event, you were given some very good advice here back in 2008:

make serious overpayments if you can in the next 4 years - the 100 percent LTV+ deals may be gone for a long time, so best to make sure you don't get stuck on a SVR at the end of your fix. Try and get it down to 95 percent at least, easier said than done though...

amnblog

There will have been no penalty to overpay on your NR mortgage so you could have repaid capital on your mortgage throughout.

GaryBC

I love the way some see life as so simple - full of simple binary yes/no, black/white, yes-you-can/no-you-can't decisions.
I imagine the majority of normal people face heart-wrenching decisions about buy/not-buy, borrow/not-borrow every day and a fair proportion will take on something which, strictly speaking, they shouldn't. But that "waffer thin mint" being dangled is sometimes all it takes to tip the decision and to have a finger wagged in their face at a later date really isn't very helpful. What they need (and presumably came here to find) is some sound practical advice in getting themselves out of the hole they find themselves in.
Here's a sobering though: How different would the world be if everyone said, "no, I can't afford it"?

TrickyDicky101

GaryBC wrote: »

I love the way some see life as so simple - full of simple binary yes/no, black/white, yes-you-can/no-you-can't decisions.
I imagine the majority of normal people face heart-wrenching decisions about buy/not-buy, borrow/not-borrow every day and a fair proportion will take on something which, strictly speaking, they shouldn't. But that "waffer thin mint" being dangled is sometimes all it takes to tip the decision and to have a finger wagged in their face at a later date really isn't very helpful. What they need (and presumably came here to find) is some sound practical advice in getting themselves out of the hole they find themselves in.
Here's a sobering though: How different would the world be if everyone said, "no, I can't afford it"?

The thing is they've already had the sound practical advice in 2008 - they didn't follow it then and their current position is now the result.

I agree with your last sentence - it does take willpower though.

AnotherJoe

GaryBC wrote: »

I love the way some see life as so simple - full of simple binary yes/no, black/white, yes-you-can/no-you-can't decisions.
I imagine the majority of normal people face heart-wrenching decisions about buy/not-buy, borrow/not-borrow every day and a fair proportion will take on something which, strictly speaking, they shouldn't. But that "waffer thin mint" being dangled is sometimes all it takes to tip the decision and to have a finger wagged in their face at a later date really isn't very helpful. What they need (and presumably came here to find) is some sound practical advice in getting themselves out of the hole they find themselves in.
Here's a sobering though: How different would the world be if everyone said, "no, I can't afford it"?

What hole? They want compo despite having gained all the way.
They are on a repayment mortgage now.

They bought (I love the way people say they "were sold" as if it wasn't of their own volition) the only deal that would work for them at the time, it was that or not buy.Their choice presumably made because it w as cheaper than renting.

Whilst later, on IO mortgage and not being able to switch off it, they could have overpaid to the same level as a repayment (according to posters here I assume they are right) or they could have saved the overpayment amount in a high interest account and repaid in one go when they remortgaged onto a repayment, saving even more money.

So they got the benefit of buying a house, not paying rent (which quite possibly was more than mortgage), they got the benefit of the rise on house prices, they could have got the equivalent of a repayment through overpaying or saving but did neither, and now they want compo.
For what exactly?

Here's a thought, how would the world be if people took responsibility for their own actions?