Northern Rock 100% Mortgages

ger_ryan22

Hi folks, myself and my wife got a 100% mortgage off NR back in Oct, just before the sh*t hit the fan basically! Anyway, we're in a 2 years fixed rate mortgage but my wife said she thought she heard Martin this morning saying anybody with 100% mortgages from NR are in danger but she didn't catch what he said. Could somebody give us some advice on what he was talking about or are we ok until Oct 09? Also, if we were to remortagage at the end of that period with someone else, what sort of charges would we incur? I heard when you remortgage you could incure costs, some quite significant? I know we'd have to pay something like £4000 if we paid off earlier that 2 years but actually remortaging after that 2 years would incur charges.

Any help is much appreciated!

dunstonh

A lot of people borrowed money on an unsecured loan as well as the mortgage at 100%. Even if you are at 100% without a loan you still may have problems.

Basically, if your borrowing is not 95% of your property value or better then you are going to find yourself stuck with Northern Rock. NR are not offering any deals so that means you move from a competitive fixed rate to an expensive variable rate which could nearly double your mortgage payments (at worst).

If your property value has improved and you didnt borrow above 100% and you can now achieve 90-95% loan to valuation, then you should be able to move lender when your deal ends.

In your case, you have nothing to worry about until Oct 09. (or a few months before when you start shopping around). Just make sure you do not get any new credit between now and then and try to clear what you have to make your circumstances more attractive to other lenders.

Datasafe_2

dunstonh wrote: »

If your property value has improved and you didnt borrow above 100% and you can now achieve 90-95% loan to valuation, then you should be able to move lender when your deal ends.

But then again in two years property prices look like they are going to be toast so we are all in deep poo.

dunstonh

Datasafe wrote: »

But then again in two years property prices look like they are going to be toast so we are all in deep poo.

Yes. That quite possibly (or even probably) will be the scenario for many. Now is the time to be tightening the belt and reducing debt.

Anyone in that situation really needs to budget and prepare. If they do this early enough they could be fine and come through this stronger because of it. If they dont prepare, keep on spending and borrowing then they are going to really suffer when their fixed rate ends.

herbiesjp

Indeed - if people can start to make overpayments to reduce their mortgage debt, and increase their equity it may go some way to limiting the damage for NR mortgage holders.

ger_ryan22

Thanks for all your advice folks, very helpful indeed. We're ok wrt debt really. The only debt we have is the mortgage and unsecured load on it and a credit card that I could easily sort out as it's not big at all (the extra from NR being used to pay off our Credit Cards at the time). I've no other loans and dont plan on getting any. I think If I can keep that up, keep up the payments on the mortgage it SHOULD hold me in good shape for when re-mortgaging time comes around. I hope so anyway.

Cheers :money:

neverdespairgirl

ger_ryan22 wrote: »

TIf I can keep that up, keep up the payments on the mortgage it SHOULD hold me in good shape for when re-mortgaging time comes around. I hope so anyway.

It would be a good idea to either save quite a bit, or overpay on the mortgage, so that in Oct. 2009, you owe less than the value of the house.

ger_ryan22

neverdespairgirl wrote: »

It would be a good idea to either save quite a bit, or overpay on the mortgage, so that in Oct. 2009, you owe less than the value of the house.

Would I be allowed to overpay on the mortgage? I think, because I'm locked in a 2 years fixed term, that I can NOT overpay or pay off outright!? Suppose that's where saving comes in to it. Would I ideally need to save a certain percentage of the house price by the time remortgaging comes around in Oct 09'?

Money eh!? :rolleyes:

herbiesjp

I believe with the NR deals, they would normally have been fully flexible and will have allowed unlimited overpayments (but not complete redemption) within the fixed rate period.

That is why, as I stated above, making overpayments may be a good way of making your money work a little harder for you

You might want to ring NR just to confirm this is part of your particular deal.

neverdespairgirl

ger_ryan22 wrote: »

Would I be allowed to overpay on the mortgage? I think, because I'm locked in a 2 years fixed term, that I can NOT overpay or pay off outright!? Suppose that's where saving comes in to it. Would I ideally need to save a certain percentage of the house price by the time remortgaging comes around in Oct 09'?

Money eh!? :rolleyes:

You'd need to check - some deals allow unlimited overpayment, some up to X % per year, or whatever. You need to look at your specific deal.

If you can't overpay, savings (after paying off debts) would be a good idea, so that you can reduce the loan-to-value required when you come to renew.

You are in a better position than many NR customers, because you have a nice long time until the end of your deal to prepare.

chappers

If you took out a 100% deal then you need to watch the market carefully and reduce your mortgage as much as you can as currently there aren't any 100% deals around and even the 95% deals look like they may do a vanishing act.Who knows what the situation will be towards the tail end of 2009.
a new mortgage will almost certainly incur arrangement fees regardless of where you go.
What you don't want to do is find yourself in a negative,100% or maybe even 95% equity situation and unable to remortgage anywhere else and stuck on NRs SVR.So save like you've never saved before and get that mortgage down.

Personally speaking I think there is far more to come to light with regards to the way NR was run towards the end of 2007, and more importantly how the government have intervened without the full information before them, from reading between the lines in the papers today I wouldn't be suprised to hear of some sort of rescue package for NR borrowers, stuck in negative equity (probably in the form of affordable re-mortgages).
Just a hunch I have no firm evidence whatsoever, if its in correct pretend I never said anything. If it becoimes true, remember you heard it here first