Northern Rock End of Mortgaged Deal (Merged Threads)

Crokeria

I agree Kinkango. NR do not, and have never done sub prime! Don't lump those of us with 100-125% mortgages as sub prime! You actually had to have a good credit rating to get this mortgage.

I think Kingkano its still early days. NR could well come up with plans like wiving the ERC or even be more lenient on those that find themselves trapped on the SVR. I am writing to NR and to my MP, it can't do any harm. If consumer power didn't work then there wouldn't be this forum!

kingkano

Crokeria wrote: »

I agree Kinkango. NR do not, and have never done sub prime! Don't lump those of us with 100-125% mortgages as sub prime! You actually had to have a good credit rating to get this mortgage.

I think Kingkano its still early days. NR could well come up with plans like wiving the ERC or even be more lenient on those that find themselves trapped on the SVR. I am writing to NR and to my MP, it can't do any harm. If consumer power didn't work then there wouldn't be this forum!

Well we might disagree there lol. They most definitely DID do sub-prime mortgages. That being a mortgage that isnt in the 'prime' category. I think anything over 95% could be considered not prime really. Sorry....

But not everyone who got a mortgage from NR was borrowing over 95%. Nor were they sub prime. In fact NR offered very good deals even for prime clients at times. I have a NR mortgage, which is only 90%, and I have no bad credit history. They just offered the best deal for me at the time.

I agree. Early days. Still got 4.5yrs on my deal. Your probably right at some point maybe they will offer reduced ERCs or something, its hard to say.

What annoys me there really is at the moment I can easily get another good deal. But I'd have to pay a huge ERC to break my NR contract? So my mortgage will remain on their books. Hopefully I will still be able to get a decent deal when my current one is up who knows though.

beingjdc

Crokeria wrote: »

I agree Kinkango. NR do not, and have never done sub prime!

During the run on the Rock, their website was all about "open for business". If you clicked through, one of the banner headlines was "open for sub-prime business". A friend still has the screen grab if you want to see it!

bernice_2

i am with NR and have a 3 yr fixed rate repayment mortgage which started last yr.
i havent heard from them yet but i am assuming my deal will remain the same until it is up for review.
has anyone have any views on which way we should proceed,? stay put or look for a new mortgage?

poppy10_2

kingkano wrote: »

surely if they wanted shot of people costing them so much from the SVR they'd let you out of your deal early, waive the ERC, to accomplish this end? Letting you go elsewhere and getting their money back.. But they won't. SO I'm not sure I can quite believe this?

A high SVR is costly for the borrower, not the bank - the bank gets more money incoming from a higher SVR.

At the moment Northern Rock can either collect a hefty fee in ERC and say goodbye to you, or keep you on their books and get a good income from the high SVR. Why should they voluntarily waive the ERC and lose that money?


Also, the Together mortgages (which make up 1/4 of NR's mortgage book) were by definition sub-prime, by US government standards.

Prime borrowers have a credit score above 620, a debt-to-income ratio (DTI) no greater than 75%, and a combined loan to value ratio of 90%, meaning that the borrower is paying a 10% downpayment. Any borrower seeking a loan with less than those criteria is a subprime borrower.

Rachman_2

Crokeria wrote: »

NR do not, and have never done sub prime! Don't lump those of us with 100-125% mortgages as sub prime! You actually had to have a good credit rating to get this mortgage.

Crokeria, I think you are trying to convince yourself here. Subprime - not prime - lending is more than 40% LTV - that's what the real world outside of the Wild West of the UK mortgage market calls it.

There's a huge difference between subprime and impaired credit - with my senible head on, I'd have called subprime over 80% LTV (in the past) and maybe 65% LTV for newbuld flats.

Just because you have a good credit rating does not make you a prime borrower - the absolute 1005 LTV means that as far as risk is concerned, you clearly are not ideal - not least because they were not charging you more - which is what I would have done - but they wanted market share and the market was bull. .... so it worked - for a while.

kirstess

I am coming out of a fixed rate with Northern Rock on 1 April. I wanted to stay with them as they have always been good and at the moment I cannot afford to pay the fees to switch to another lender (going on holiday in May). I called Northern Rock who told me that I could go into another 2 year fixed rate but my mortgage was going to go up by £80 per month and they would charge a product fee of £3000!. Obviously there was no was I was going to
agree to this and they said I could either go onto the variable rate and pay an extra £200 per month or increase my mortgage by 12 years and still pay an extra £80. In the end we agreed that for the time being I would just go onto an interest only mortgage (which is only £10 per month less than I was paying on my fixed rate anyway) and then when i have saved up enough I will switch to another lender. Am hoping that the market might have sorted itself out a bit in the next 6 months or so and I can then get a better deal.

At the moment everywhere seems high and those that are doing free fees just add it onto the mortgage anyway so I would end up paying more...can't win.

MarkyMarkD

There were some earlier "guesses" about the penalty rate on the unsecured part of a Together mortgage if the secured part is redeemed. According to this thread on CAG the penalty rate is 5% above BoE base rate (although I suppose it may differ on different aged Together deals).

It's all very well to say that better rates are available elsewhere. But it's hard to borrow substantial amounts, over a long term, at better rates than that.

And having a large unsecured debt will reduce a borrower's attractiveness to other mortgage lenders significantly.

It may well work out better value overall to keep the whole thing with NR and concentrate on paying off as much as possible, as quickly as possible, until the whole mortgage is back under 95%.


Regarding people suggesting that NR will start waiving or reducing ERCs, I see no reason why they should in the slightest. They will be getting rid of absolutely loads of business by letting people walk at the point they are free to go; rushing it still further by throwing away tonnes of profit in the form of ERCs is just wasting taxpayers' money.

Ditto re making special arrangements for those coming to the end of Together incentivised rates. Given that there's nowhere else for these borrowers to go (as everyone else has withdrawn these products) such borrowers will logically, and fairly, end up paying SVR. They are in no different a position to the one we'd all be in if lenders all stopped offering incentivised deals: indeed, they are in the same position as we ARE already all in, given that the pricing of all incentivised deals (relative to bank base rate, but not necessarily relative to the banks' cost of funds) has increased hugely over the past few months due to the credit crunch.

MarkyMarkD

kirstess wrote: »

I am coming out of a fixed rate with Northern Rock on 1 April. I wanted to stay with them as they have always been good and at the moment I cannot afford to pay the fees to switch to another lender (going on holiday in May). I called Northern Rock who told me that I could go into another 2 year fixed rate but my mortgage was going to go up by £80 per month and they would charge a product fee of £3000!. Obviously there was no was I was going to
agree to this and they said I could either go onto the variable rate and pay an extra £200 per month or increase my mortgage by 12 years and still pay an extra £80. In the end we agreed that for the time being I would just go onto an interest only mortgage (which is only £10 per month less than I was paying on my fixed rate anyway) and then when i have saved up enough I will switch to another lender. Am hoping that the market might have sorted itself out a bit in the next 6 months or so and I can then get a better deal.

At the moment everywhere seems high and those that are doing free fees just add it onto the mortgage anyway so I would end up paying more...can't win.

I'm pretty sure that you would be better off to bite the bullet and pay the fees to switch. Whether you add them to your loan or not isn't really the point - if you are reducing the rate your are paying on the loan significantly, and the overall deal stacks up better than the NR one (which it almost definitely will) then you should switch lenders.

sappho_2

Help! My svr with the Rock is 7.59. Have searched everywhere for something lower, but to no avail(too old, income too low). Am I stuck with the Rock or sub-prime? Is anyone else in this position?

MarkyMarkD wrote: »

I'm pretty sure that you would be better off to bite the bullet and pay the fees to switch. Whether you add them to your loan or not isn't really the point - if you are reducing the rate your are paying on the loan significantly, and the overall deal stacks up better than the NR one (which it almost definitely will) then you should switch lenders.