To Helidoor and back 3 December 2021 at 6:05PM in Loans 3 replies 151 views

GSL73

Hoping somebody has some advice before we finally call them. The synopsis is:

We had an unsecured loan with Northern Rock on top of a mortgage. 110%. Used it for the deposit, etc

We sold the flat 7 years ago but couldn't afford to buy again as prices spiked. Paid off the mortgage but kept a bit of equity (in hindsight, should have paid it all off) as I was changing careers.

We happily kept making payments on the loan thinking we were chipping away. 

We checked in on it about a year or two ago (whenever NRAM sold their loans on to Helidoor).

Turns out (and here's our financial naivete and lack of FA advice shining through) that we're tied into paying the loan's interest OVER 20 YEARS like a mortgage. 

This doesn't feel right as we don't have the mortgage anymore. All paid off. It's just a loan. Want to be confident when I finally talk to them as I've been burying my head on this one.

Why are the terms the same? What can we do to make it shorter? (overpay?)

We can make the payments, okay, but we're now in the fortuitous position of being able to think about getting back on the ladder again. Don't want this hanging around us for another 18 years or so...

Any advice welcome. Go easy on us...

Grumpy_chap

If you repay the capital there will be no further interest accruing.  Front Loaded interest is no longer permitted.

If you read a projection that shows the total amount of interest assuming that the loan runs the 20-year term, then that is just a projection and will change as you over-pay.  In the absence of information to the contrary, the loan company can only show a projection on the basis of the expected 20-year term.

Is that the answer to the question you asked?

sourcrates

How much was the original loan for, do you know if it was CCA regulated, or not, (depends when you took the loan, and how much you borrowed) If your loan was taken out before 6 April 2008, it will only be CCA regulated if the amount you borrowed was £25,000 or less. 

Do you have any original paperwork at all ? as that will detail, what you pay, when, and for how long, what interest rate you pay etc etc, it will also tell you if you can overpay the loan, or if there may be any penalties for doing so, which is doubtful.

If you don`t have any paperwork, and the loan was CCA regulated, you can request a copy of your agreement under section 78, consumer credit act 1974, from the original lender.

Thrugelmir

GSL73 said:

We sold the flat 7 years ago but couldn't afford to buy again as prices spiked. Paid off the mortgage but kept a bit of equity (in hindsight, should have paid it all off) as I was changing careers.

An expensive decision to make looking back with hindsight.