Northern Rock 100% Mortgages

Gorgeous_George

If you can afford to overpay, you may be better off saving in a cash ISA instead. You just need to check the interest rates. If the ISA pays a higher rate, go for that. Otherwise, overpay (the mortgage) if possible.

You can invest £3K this year (to April 5th) or £3,600 each after 6th April (IIRC).

Other than that, it's all good advice. Only thing to add is that if you think prices will fall significantly, you could be better off paying the redemption penalty and renting. Only time will tell on that one.

GG

dunstonh

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).

That would be worrying if it does happen. As there is no real credit market to allow it to happen, that would mean the taxpayer could end up funding the lower rates. I would be pretty angry at that as I pay my mortgage and I dont see why I should pay those that were less prudent.

This could also be seen as unfair commercial advantage which could breach EU law.

MarkyMarkD

Dunstonh People who had borrowed 100% or more from Northern Rock were not paying very attractive fixed rates, so their payments will not double as a result of them rolling off to SVR. The increase is more likely to be around a quarter or a third.

EdInvestor

It would be surprising if the landscape didn't look more positive in two years' time: they are already talking about NR being able to pay back the Government in a matter of months.

It's also quite possible the property market will just freeze for a while to enable the solution of the banking problem and then restart, rather than crash.Certainly the hiatus is helping BTL investors who were in need of some luck.

But certainly there's no harm in anticpating a 'worse case scenario' by either saving up or overpaying the mortgage over the period so you have some equity in the home next time.

dunstonh

MarkyMarkD wrote: »

Dunstonh People who had borrowed 100% or more from Northern Rock were not paying very attractive fixed rates, so their payments will not double as a result of them rolling off to SVR. The increase is more likely to be around a quarter or a third.

True. Although some of the other borrowers from 5 years ago on a low fix could be in for a shock with current rates. If properties do drop in value much more they may be sucked in as well.

Lots of if and maybe but thats why you plan for the worst and hope for the best.

chappers

dunstonh wrote: »

That would be worrying if it does happen. As there is no real credit market to allow it to happen, that would mean the taxpayer could end up funding the lower rates. I would be pretty angry at that as I pay my mortgage and I dont see why I should pay those that were less prudent.

This could also be seen as unfair commercial advantage which could breach EU law.

Couldn't agree more, there was an article in the Indy yesterday, all be it quite a short one, alluding to the fact that the government didn't know that 20% (200,000)of NRs mortgage book was "together" mortgages, before it intervened and how bad it would be for all these people to lose their homes.
Also just a small snippet a bit glossed over about how NR were placing all the good, safe mortgages through Granite, their off-shore tax free company and leaving all the higher risk stuff directly with NR.

With regards to unfair commercial advantage, I'm sure there are some banks out there thinking that has already happened.
I don't think we have heard the end of the NR saga, not by a long chalk.