Northern Rock End of Mortgaged Deal (Merged Threads)

Yorkshirechick

It looks like I'm in the same boat as everyone else. Although I'm not glad you're all struggling with NR, it's nice to know I'm not the only one IYKWIM.
We bought our house nearly 2 years ago, so our fixed rate of 4.88% is running out at the end of January. We've also just started paying the mortgage again after a 6 month break (had our first baby), so unfortunately even though we've been on a repayment mortgage for 2 yrs, with the extra interest added on (due to the break), we still owe the same as when we first bought it :mad:
Anyway, we bought the house for 185k, put down a deposit of 10k, and so we still owe 175k. Add to that the fact that I now only work part-time, and we have to pay £350 a month childcare, and basically we're screwed!!
I've done my sums, and we can afford it on paper if we stick to a budget of peanuts. If anything breaks, or anything happens to the car, it will have to be paid for on a 0% credit card until we get our bonuses (March).
I read on here that people are still able to move to interest only mortgages. I called NR and asked them about this a couple of months ago, and they said they couldn't move us, as it would be the same as us changing product!! Should I give them another try when our deal runs out??

stephensdan

I asked NR about moving to interest only today. They said they 'could' only it's not straight forward and would cost £75 to do.

I'm not doing that, I only asked out of intrest in case it came to it, I would only reccomend it as a last resort.

Anyway, I've spoken to 3 different advisors today. One of them is still searching the market and is going to get back to me. The other two had pretty lengthy conversations with me.

Their opinions are that in my situation, I'm better off sticking with the NR variable rate at the moment rather than moving mortgages. The bank of England are likely to start cutting the base rate and at some point (hopefully by Feb) Northern Rock will start reflecting the drops in the rate.

The advisors said that even if they could sort me out with a fixed deal at the moment, I'm looking at around 6% but what's the point being fixed in to that when the rates look set to go lower on the deal I'm currently on and I may be paying less.

(I have the aditional problem of not being able to move the unsecured loan part of my mortgage at the mo due to the hose value going down so that rate would go up to 12% )

If it stays at the rate it's on now, it's an extra £105 a month for me come Feb but hopefully it will go down by then and if not, soon after.

Then in 12 months, we'll see what shape things are in and possibly give it another go.

ger_ryan22

stephensdan wrote: »

^^^Hi Ryan22, I'm sure someone will correct me if I'm wrong but as far as I'm aware, yes - you'll just pay Northern Rocks standard variable rate as long as you are still on their books. How much you pay will depend on what their rate is at the time, which is pretty much a guessing game, it could be higher or lower so you may save each month compared to what you pay now or you may find your payments going up slightly.

Given that you have a year left (almost) and you are manageing at the moment, I wouldn't worry about it for now. Just check out some other deals close to the time by seeking advice from a finance / mortgage advisor (there's plenty of info about that on this site)

with regards to my situation (posted above a few posts) I'm currently trying to get advice from an advisor, I've left a few voicemails on numbers that have been passed to me and my local estate agent is trying to get an appointment set up with one of their people.

Thanks for the advice there Stephensdan and I hope everything works out in the end for yourselves. I'm sure it will

stephensdan

Thanks!

I'm actually more optimistic now after getting advice and reading up on the rates.

It looks like as far as the government and Bank of England are concerned, bad times call for drastic measures and the base rate should be cut considerably over the coming months.

At some point the Rock is going to have to reflect these cuts. If they end up at 3% and the Rock drop its VBR to 5 or even 6% then it's good times for all of us, (Apart from those on fixed deals at a higher rate)

indications are that we can realistically expect these cuts in 2009, the way things are heading while the government try to sort the economy out.

(((Hopefully the cuts will get banks lending to each other again, 1st time buyers buying houses again, mortgage deals getting better and house prices going up - then we can have a new thread!)))

ger_ryan22

stephensdan wrote: »

Thanks!

I'm actually more optimistic now after getting advice and reading up on the rates.

It looks like as far as the government and Bank of England are concerned, bad times call for drastic measures and the base rate should be cut considerably over the coming months.

At some point the Rock is going to have to reflect these cuts. If they end up at 3% and the Rock drop its VBR to 5 or even 6% then it's good times for all of us, (Apart from those on fixed deals at a higher rate)

indications are that we can realistically expect these cuts in 2009, the way things are heading while the government try to sort the economy out.

(((Hopefully the cuts will get banks lending to each other again, 1st time buyers buying houses again, mortgage deals getting better and house prices going up - then we can have a new thread!)))

Well that would be a breath of fresh air I have to say! I hope you're right. This 12% thing you were talking about, does this apply to everyone's Unsecured loan? I have that 18k unsecured and 118k secured on our mortgage deal. I'm currently on a high rate (7.15%) so do you think I'm looking at a huge hike in payments each month if say the market stays exactly the way it is now?

stephensdan

...sorry for the ramble - I bolded the bit that answers your first question!

If you wanted to remortgage, you'd ideally need to cover both parts of the loan in to your new mortgage (the unsecured loan and the mortgage itself)

You're only going to be able to do that if the value of your house is at least 90% of the total outstanding on the mortgage and loan. (Currently mortgage companies only seem to be offering 90% loan to value ratios at best)

If like in my situation you could only realisticly move the mortgage part then Northern Rock would retain the unsecured loan and then raise the interest on it to what would currently be 12.34% (It's worked out at 5% higher than whatver NR's current VBR rate is) which for me on 19K would be £109 p/m to something like £190 p/m (£90 increase)..regardless of the £90 extra, 12% interest is to much.

It's to much of a risk, that's a silly amount to pay so really if you are going to remortgage you want all of the debt shifting or at least a better deal for the unsecured part.

As things go though, in your situation the rise would only be going from 7.15% to 7.34% in todays terms, so if you went to a VBR rate, you wouldn't be badly hit at all. 136000 (what you owe now) over 25 years at 7.15% is 985 a month, if that raises to 7.34 (the current rate), it's 1002 a month (£17 a month extra!)

The rates are likely to drop though so by the time you move to a VBR rate, you may find you are actually saving money becuase you are on such a high fixed rate at the moment.

I think you said you have about a year left though didn't you? Obviously I can't see in to the future that far but I would of thought after about a year they would be starting to increase rates again (I think they will go down during 2009 and back up after depending on how that works out) so by the time you change to a VBR it will probably make little to no difference to your monthly payments as they will likely be about what they are now again... hopefully by that time it will be easier to get a new mortgage deal as well.

With a year to go, my advice would be don't worry. Wait until about three months before your deal is up and then go get advice from a financial advisor. Unless you are stuggleing now with your current fixed rate...

JH81

First of all thanks to Stephensdan, some useful advice as I am in pretty much the same boat. Fixed mortgage ends on 1st Jan 09 at 5.89% going up to the variable rate.

Briefly I have 100% of 118k, 106 was secured the 12k unsecured, pretty much paid off nothing in the 2 years (current balance is 116,888) so stuck with a house which is probably now worth 115 at the very best.

Spoke to a FA today, who told us the chances of remortgaging are zero, which was no suprise, but he is coming to see me next week and we will go through as much as we can utilities, insurance etc to see what we can do to make up the increase of the mortgage payments. Also hoping to try and put some sort of plan in place for the next 5 or so years to try and get somewhere so we aren't paying this ridiculous rate forever.

It is a very frustrating position to be in, and one which will make things very tough for a while for everyone who has one of these mortgages. I do feel a little let down by our previous advisor and quite annoyed at myself for being naive and thinking the be all was to own a house, but I guess its now just a matter of dealing with the situation and trying to make it better.

IcklePickle_2

Anyway, I've spoken to 3 different advisors today. One of them is still searching the market and is going to get back to me. The other two had pretty lengthy conversations with me.

Their opinions are that in my situation, I'm better off sticking with the NR variable rate at the moment rather than moving mortgages. The bank of England are likely to start cutting the base rate and at some point (hopefully by Feb) Northern Rock will start reflecting the drops in the rate.

Hi, I just wanted to say thank you as you've actually helped me more than you know just by posting this!

We're in a very similar situation to you financially. I've been feeling sick and anxious about it over the last few weeks since I started reading this thread and realised what the situation is.

Our NR fixed rate ends 1st Feb 2009 too. I don't know exactly what our flat would be valued at - it's complicated! - but I don't think we'd have enough equity to re-mortgage with a high street lender, so I think we'll be watching to see what happens with NR's SVR over the next month or so.

I'll post tomorrow with more specific details when I can gather everything together.

Just wanted to say thanks really as I kept thinking of it in terms of the NR SVR DEFINITELY being really high, but hadn't thought of the possibility that it may actually come down.

IcklePickle

stephensdan

Glad to be of help!

The more you understand, the less worrying it is. It also helps that you aren't the only one and the government are very aware of this, hence the rate cuts. The main thing is to get a grip on your own income and work out what you can manage though. For me, if I do end up paying £100 extra from February and cannot afford it, then the Sky TV (£50) will go before I start to sacrifice my social life (the pub)! But it's each to their own, I understand it must be more worrying for those with other responsibilities such as kids!

Anyway, the next rate meeting is this Thursday, it's expected to go down half a percent although a lot of advisers expect it to go down a whole percent for the first time in a long time to start bringing our rate in line with the USA etc, who are leading the way with this. Basically the government need to do everything they can to sort this out for everyone and lowering rates is a big part of the plan, the pressure is then on the banks to pass on the cuts. The only problem the government have is that as they do this, they need to answer questions of how we got in this situation in the first place (which you may of seen on the news last night)

It's not far fetched to expect the base rate to continue falling as we go in to 2009, probably reaching the lowest in mid 2009 (which I think is actually mentioned in the minutes of the last Bank of England meeting which is available on their website)

(The plan then is that by the end of next year banks will be lending to each other again and we'll have a better choice of deals to move to and with that more people will be buying houses and prices will start the process of climbing again.)

^ in the meantime we should be benefiting from the rate cuts as they are passed to our variable rate mortgages. Giving us the chance to get ourselves sorted out and prepared for when things start picking up.

To some people in this situation, being offered a fixed deal now - they may jump at it thinking it's the way out, but it's looking like they could be losing out and stuck in a deal for the next few years where they are actually paying to much. What I'm saying is, that in stressful situations it's sometimes easy to jump for a lifeline that my not actually be the right one, you don't want to make things worse, just sit back and take everything in, get some advice and take time over your options.

Here's some sites you should all find of intrest:

http://www.guardian.co.uk/money/interestrates (Guardian interest rates page) top headline this morning:
"Crunch meeting may order biggest cut in committee's 11-year history"

http://companyinfo.northernrock.co.uk/corporateRelations/news/mortgages.asp (Northern Rocks news page, this is where they will post any cuts to their variable rate and press release info)

http://www.bankofengland.co.uk/ (Obvious one!, the current rate and next meeting info and minutes are all available on the front page)


http://www.bbc.co.uk/homes/property/mortgagecalculator.shtml (Excellent calculator for working out what the cost will be with different rates)

http://www.moneysavingexpert.com/mortgages/best-mortgages-cashback (This sites guide to remortgageing, but remember it has not been updated to reflect the credit crunch and really, get advice before doing anything along these lines from an advisor, see your estate agent if you are struggleing finding one, they normally have their own advisors that give free advice.

ger_ryan22

Superb stephen Thanks!