Northern Rock End of Mortgaged Deal (Merged Threads)

MarkyMarkD

The best value is to pay it off the highest rate. It's irrelevant whether the bit you pay off is nominally repayment or interest only, unless there are overpayment penalties (and with NR there are not normally).

As you suggest, picardy, the best objective is to get your aggregate LTV down to a level where you can realistically remortgage away from NR - or at least, have the option to do so.

picardygirl

MarkyMarkD wrote: »

The best value is to pay it off the highest rate. It's irrelevant whether the bit you pay off is nominally repayment or interest only, unless there are overpayment penalties (and with NR there are not normally).

As you suggest, picardy, the best objective is to get your aggregate LTV down to a level where you can realistically remortgage away from NR - or at least, have the option to do so.

Thankyou, i've phoned NR and there are no overpayment penalties (didnt think there were but wanted to check) - they obviously cant advise me what part of the mortgage to allocate a payment too, but have told me the recalculated figures for monthly payments for each separate part - on a month to month basis, its cheaper (only £13 pm) to take the £11k of the repayment part of it, but i think i should take it off the interest only part of it.

NR were very helpful on the phone, I also asked about overpaying each month and they said easy, just tell them what i want to pay and they'll arrange the direct debit appropriately. Didnt want to have to make a separate standing order payment as it could be tempting to stop it!!!

dbpayne

Hi all

First post, I came across this accidentally when frantically browsing the website for help.

Basically I have a fixed rate with NR at over 6%, it is due to end in September. We were first time buyers 2 years ago and took full advantage (stupidly) of NR's 100% mortgage offer. Our house was £124,000. We borrowed £140,000 to pay off some debts. I reckon house prices have falled to about £110,000 is our area so about 30k in negative equity.

Obviously this means we cannot possibly remortgage with another lender. NR are offering no deals for existing customers. So what does this mean? I read something about SVR at 4.79, so basically will we be put on this when our fixed rate is up? I presume SVR's are not fixed, so if that changes we will find ourselves paying more?

I'm sorry, I don't really get all this. So initially, would our monthly payments go down, as 4.79 is lower than 6%? But is it likely to go up in the forseeable future?

If we paid of about £10,000 towards our mortgage would this significantly lower our monthly payments? at the moment we pay £853 per month, but it leaves us little to save with, so am hoping at least for a few months the payments will be lower.
How long will we be stuck with NR? What will it take for someone to offer us a mortgage deal elsewhere? I am so worried we're going to end up with no mortgage or house or anything!!

MarkyMarkD

You will likely go on to SVR of around 4.79%, so you'll be better off for the near future.

If rates go up, there is unlikely to be anything you can do about it.

If you pay off £10,000 you will save around £479 a year (4.79% x £10,000), so around £40 a month - not a great deal.

If you can afford your present level of payments, it would make sense to keep paying the same amount even when your required payments fall as that will help to eat into the negative equity.

You definitely won't end up without a mortgage, but you may well be stuck with NR for a very long time because hardly anyone will lend over 90% of value i.e. around £99k in your case - so it's not just the £30k negative equity gap you have to bridge, but a total of £40k or so.

dbpayne

Thank you so much for your answer

We can afford the payments we are making now quite comfortably (well, as comfortable as you can be in this day and age!) so we should stick at what we are paying even if our mortgage falls? Ok

My main worry was that I would end up without any mortgage at all, but you say this won't happen? Which is a bg relief. So NR will keep us on even thuogh they say they are not offering any deals to exisiting customers? I thuoght this meant they were getting rid of their customers as soon as their fixed rate is up but they won't do this?

Phew. I will be concerned being on SVR in case it goes up again...but you think in september onwards it will still be the rate it is now? to give us a few months to pay off as much as we can!

When is the SVR expected to go up again does anyone know?

Oh stress everyone told us not to buy in 2007 but we didn't listen!! xx

payless

MarkyMarkD wrote: »

If rates go up, there is unlikely to be anything you can do about it.

.

If your really want to fix and feel due to LTV or circumstances you can't find a new lender and if existing lender doesn't have any options....
There is a way to stay on current deal and hedge against rate rises for 2 years... although of course comes at a cost -

MarkyMarkD

dbpayne

I don't think rates will rise that quickly. Some people think it won't be this year at all. But you never can predict.

payless

I thought that this sort of "hedging for consumers" was prohibitively expensive? No reason why it should be, of course, apart from the lack of demand and the huge risk of spurious complaints from those who will claim not to have understood, when it goes against them.

deefadog

I would have thought that as mortgage rates on the fixed side have not followed the base rate as it should, then even a 3-4% rise would not move them up as they would if the base rate was at 6% and moved to 9%? Is that a fair assumption?

payless

Mark I've looked at hedging into some detail - both using instruments ( although for amount involved / easy access spreadbetting appears to be just as good) - although its not really a concept I would be happy to put to consumers in that format. The packaged "hedging" product has its little querks, - maybe not suited to those with lots of equity how can get market leading fixed, but certainly an option to consider for someone who is finding it difficult to get a fixed ( and really wants/needs one) Or someone who is on a low SVR ( or better still a low margined term tracker :-) ) and doesn't want to give it up but wants to hedge- then its certainly can be a cost effective option.( not cheap but can be cheaper than fixing)

Mis -sale claims - just always a possibility, ( maybe less so now at basde at 0.5%, than it was when base was 5% ) thats why it needs careful explanation

payless

deefadog wrote: »

I would have thought that as mortgage rates on the fixed side have not followed the base rate as it should, then even a 3-4% rise would not move them up as they would if the base rate was at 6% and moved to 9%? Is that a fair assumption?

Would like to think so, although of course new tracker deals have not followed the base rate down ( ie as base falls the marin on new deals rose) .. and those having taken high margin trackers will follow the base up !