100% mortgage - Northern Rock dropping mortgageassets - how do we get a new mortgage?

byrnsey

Hi

We got a 100% two-year fixed rate mortgage with NR. It is up for renewal Feb 2009.

If NR is dropping 50% of it's mortgage assets, i.e. passing them on to other lenders so they can make back the money to pay the Govt, then of course we will be asked to go elsewhere for a mortgage in Feb 2009.

But we had to go with NR because no other banks were giving 100% mortgages then, so our fear is that with the current market - and probably worse in six months - they wouldn't go near us.

Would our only hope be that if our house value has risen by 3-5% that would count as 5% investment?

Any advice or thoughts on this very welcome.
I don't think I am mad in thinking the banking/lending sector as a whole in the UK can only get worse before it gets better.

Adrian

Richard_Webster

You can keep your NR mortgage, its just that the payments will go up because you will come out of the fixed rate and go onto whatever variable rate they (or their successors) then are offering.

There were never that many providers doing 100% mortgages and hardly anyone will do a 100% remortgage so when you bought you should have reckoned on keeping the mortgage if house prices did not go up enough that you could make a new mortgage only 90-95% of value.

byrnsey

Richard_Webster wrote: »

You can keep your NR mortgage, its just that the payments will go up because you will come out of the fixed rate and go onto whatever variable rate they (or their successors) then are offering.

There were never that many providers doing 100% mortgages and hardly anyone will do a 100% remortgage so when you bought you should have reckoned on keeping the mortgage if house prices did not go up enough that you could make a new mortgage only 90-95% of value.

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thanks Richard. But if NR are dropping 50% of their assets surely it is not our choice if we want to stick with them - they can tell us to go elsewhere, can't they?

tomatopuree

byrnsey wrote: »

----

thanks Richard. But if NR are dropping 50% of their assets surely it is not our choice if we want to stick with them - they can tell us to go elsewhere, can't they?

They can't force you to change. The rate may rise massively at the end of your fixed rate period (which may in effect force you to move providers). If NR are looking to reduce the number of mortgages on their books then they may sell your mortgage off to another lender. That doesn't mean you have to do anything though if the rate at the end of your fixed rate period is adequate.

going2die_rich

Well you've got just under a year to build up some cash. So cut back and start saving. Possibly rent out one of the rooms in your house?

Lotus-eater

going2die_rich wrote: »

Well you've got just under a year to build up some cash. So cut back and start saving. Possibly rent out one of the rooms in your house?

Thats a very good point, time to do a drastic lifestyle change me thinks and start saving like mad. Look at the Old Style thread on how to save money on food. Drastic measures now will pay off big time in the future.
This of course is assuming you are not living on the poverty line already

neverdespairgirl

NR can't get rid of you altogether - it's not a 2 year mortgage, it's a 25 (or 30, etc) year mortgage with a 2 year fixed period.

But after that ends, you will pay the SVR - which is a lot more than a nice fixed rate.

You have nearly a year - get saving, every way you can! That way you may be able to reduce the % mortgage you will need.

byrnsey

thanks all,

well, here's the deal - as we were 100% they shafted us with a massive rate - 6.6%. Ouch indeed.

Since then, of course, the central bank interest rate has come back down and may do again. Do this mean our rate should - as it is all about the national rate - go down at the end of the fixed period?

pollyanna24

To get the best fixed rate, you will need to have more equity in your house. 25% seems to be the best these days.

If I were you, I would overpay as much as you can / are allowed until your rate is up and then hopefully that will shift you in the 5% / 10% range.

Then you might find yourself with a better than you are on now, who knows?

barnaby-bear

byrnsey wrote: »

thanks all,

well, here's the deal - as we were 100% they shafted us with a massive rate - 6.6%. Ouch indeed.

Since then, of course, the central bank interest rate has come back down and may do again. Do this mean our rate should - as it is all about the national rate - go down at the end of the fixed period?

Yeah but the SVR is always about 2% higher than BoE central rate and NR is offering higher on risky loans like 100% after 2 years so I'd reckon on 7.5% at least

tomatopuree

byrnsey wrote: »

thanks all,

well, here's the deal - as we were 100% they shafted us with a massive rate - 6.6%. Ouch indeed.

Since then, of course, the central bank interest rate has come back down and may do again. Do this mean our rate should - as it is all about the national rate - go down at the end of the fixed period?

NR will have a rate set above the BoE rate. The BoE rate is currently 5.25% but the base rate is likely to be a couple of percent over this (eg 7.25%). It could be more, could be less. For instance on my professional studies loan the interest rate is 2.75% above the BoE base rate thus giving me a rate of 8%.

Edit - barnaby-bear beat me to it