Northern Rock End of Mortgaged Deal (Merged Threads)

io777

Our Together fixed rate deal ends Nov 2011 and I want to get us in the best position before then by overpaying as much as possible.

Given that I *think* I can write to NR and tell them where I want my overpayments to go...

Should I choose to overpay the:

1. mortgage secured part - currently £240,000 and hope to improve our LTV when remortgaging in the future (house value currently £300,000 but worried about house values dropping in next 3 years)

OR

2. overpay the unsecured part - currently £20,000 and avoid (minimise) the situation where we remortgage away from NR and they convert the unsecured part to 15%

or does it not make that much difference?

Thanks

MarkyMarkD

By 2011 Northern Rock will be a different beast to what it is today, and it's likely that they might actually offer a reasonable remortgage deal. But I'm not sure if that will apply to people effectively with negative equity on Together loans.

You can't realistically pay 15% on anything unsecured. That's just silly. So in 2011 you will realistically want to remortgage as much as possible, and have as little as possible as an unsecured loan. In fact, if the market stayed as bad as it is now, few lenders would like you having an unsecured loan as well as the mortgage unless your income was amply more than the mortgage itself would require.

Given that you'll realistically be refinancing the whole lot, it's academic what the mortgage/loan split is at that point. Simply overpay wherever you like.

io777

We are not in negative equity now but a 20% drop by end of 2009 isn't going to help (who knows what will happen 2009-2011).

I just hate the idea of being able to remortgage but be stuck with an unsecured loan at such a high rate, hence my preference would be to pay off as much of that as possible first.

Stitchlover1

We bought a mortgage with NR in Sept 2007 and so have had our mortgage a year now. We are on a fixed rate till 2012 and have an unsecured loan of about £25,000, so basically have a 120% mortgage.
We just don't know what to do at the moment, either pay money off the mortgage in overpayments, or save the money and pay a lump sum, or just hang on as who knows what is going to happen in 2012 ?!!
We also would like to start saving for a wedding, but are just thinking should we squander the money on a wedding, then come 2012 there could be a possibility of us not having a roof over our heads !!

katew87

Hi
I just fixed a deal with NR yesterday and it was the most competitive rate I could find. 5.69% fixed for 5 years with no early repayment charges and £995 fee, I think this is a great rate.

Fullspizz

Yeah, shame they don't offer it to existing customers though!!
I bet there are loads of NR customers who pay their mortgage on time who are unhappy about them not offering remortgages to existing customers, but then giving them to new customers who move their mortgage to them.

MarkyMarkD

io777 I don't understand why you think you'll end up stuck with the unsecured loan at a silly rate. If you can get a remortgage with an unsecured loan at 15%, you'll be able to get a remortgage with an unsecured loan fixed at a far lower rate. And presumably refinancing the unsecured element will also not be a problem.

So there's no need to worry about the prospect of paying the 15% on the unsecured, as it simply won't happen. So whether you pay off the unsecured or secured first also doesn't matter.

Stitchlover Unless you can earn more interest, net of tax, than your mortgage rate, you should definitely pay the money off your mortgage - as long as there are no penalties for doing so.

Kate/Fullspizz I really don't understand why NR are writing new business at competitive rates, but refusing to allow any existing borrowers to switch. If their aim is to make the most money possible out of those who cannot switch - because of high LTVs or poor credit rating - then that's one thing, but letting high quality customers walk rather than offering anything even half decent is ridiculous.

knighty76

Hi all,

My fixed rate is up in December this year and I've been to see my Mortgage broker. I borrowed about £124,021 on the Together package.. £100,800 secured and £22,521 unsecured. Didn't have the exact figure but my broker and I reckon I still have arond £121k to go. I (optimistically) guessed that my house was worth £130k as I have made significant improvments (got it for £112k.. had debts to consolidate). This means I am looking at a 92-93% mortgage.

We put my numbers into her supercomputer and waited for the result... and it came back with one, from RBS. At 7.89%. I nearly cried.

After doing the maths, and taking into account the feeds involved in moving, I will be (at present) far better off staying where I am on NR's standard variable rate, which I believe to be 7.42% or thereabouts.

My payments are clearly going to go up.. my fixed rate was 5.89% so it was around £735 pcm, now looking at upwards of £850 pcm.

And now I read that NR are offering new customers 5.69%.

Any suggestions? Beyond sucking it up and waiting to see what happens, which is a risky approach at present, my only other option would be to try and sell at a value high enough to cover my remaining loan and associated costs. I have no spare money. It would break my heart to do it, but is it really worth this much money to keep my foot on the ladder? I could be paying rent at £450 pcm for a similar house and putting £400 away in savings each month... that's around 20k over 4 years. Surely this is more than the house market is going to make me over the next 4 years?

But I do love my first house... :-(

Any suggestions welcome. There seems to be no reason why NR would offer me anything to keep my custom at present, even though I've never missed a beat on repayments and they've made around £12k profit from me over 2 years!!! Is it worth talking to them? I read somewhere else that another lender had been approaching NR customers coming towards the end of their fixed rate and offering to take them on... anyone have any info?

Thanks in advance,
Rich (knighty76).

MarkyMarkD

I think NR's SVR is 7.49% actually.

Surely there isn't much maths involved in working out that paying 7.49% is better value than paying 7.89%?

Your valuation may also be very optimistic and if you sell up, you will almost definitely realise a loss once you've paid off the mortgage.

I think that "sucking it up" and staying with NR may indeed be the best thing to do, whilst doing as much as you can to overpay on the mortgage and get the balance down.

You say NR have made around £12k profit from you over 2 years. How on earth have you calculated that? Or do you mean you've paid them £12k, virtually none of which will have been profit?

knighty76

When I said £12k profit, I was referring to that portion of my repayments which has been interest, since only around 2 or 3k has come off my outstanding loan amount. Isn't this profit for NR?

Any yes, I am aware that 7.89 is a higher number than 7.49.

The basis of my post was to ask for helppful advice, if anyone was in the same boat (struggling to move their mortgage, yet being a reliable and profitable customer for NR) had they had any luck speaking with NR? Or was there anything I hadn't thought of?

At this higher repayment rate, overpaying will simply not be an option.. unless Walkers crisps decide they liked my "do me a flavour" suggestion and throw their 50k prize money my way.. !