Financial Blackmail - Northern Rock

greenwood1

I had a 2 year fixed mortgage with Northern Rock. On expiry I renewed it with a Northern Rock 18 month fixed at repayments £688. Northern Rock have written to me as follows. Your mortgage expires on 1st May. Your new monthly payment will be £1200 an increase of (£512). When I took the last product, they said they would offer me another competitiive rate on expiry. This time I have no choice whatsoever and have to move to another lender. Penalty to move £5600. If I stay with them it will cripple me financially. If I move then I have to pay an extra £5600. Can I do anything about it ? Their letter says that their S/V mortgage rate is competitive. This is untrue. They then go on to say that I should contact an IFA as I may wish to arrange a new mortgage, knowing that they can charge the extra £5600 early redemption charge. Do they still have the same status, is the contract binding, are their any loopholes. I think it is a disgrace that they can just offer an unrealistic rate and get away with it. Can someone please advise me ! !

Rick62

How long does the ERC last for? Normally this ends at the same time as the fixed rate, i.e. 1st May.

homer_j_3

So on the 1st May 2008 you are free to move, so why does the £5600 kick in - does it have extended tie ins? If so, this should have been set out within the the original terms and conditions of the mortgage.

KTF

Have you an extended redemption penalty after May 1 or after the 2 year fix is finished can you move mortgages with no penalty.

If you are free to move then what is the £5600 charge for?

Kez100

Were you on a discounted deal not a fix?

Gorgeous_George

Sounds like you were mis-advised by some incompetent buffoon who was more interested in churning mortgages than providing sensible, semi-professional advice.

Whether you can do anything about it or not is another matter. I fear that you will not.

The party's over.

GG

dunstonh

Sounds like you were mis-advised by some incompetent buffoon who was more interested in churning mortgages than providing sensible, semi-professional advice.

I cant see anything in the post to confirm this. There is a lot of confusion from the OPs post though. The main one being why (or if) is there an ERC being charged when the deal ends. This either suggests the OP is misreading the information or there is an extended tie in.

Do they still have the same status, is the contract binding, are their any loopholes. I think it is a disgrace that they can just offer an unrealistic rate and get away with it.

The contract with NR hasnt changed in any way. They offered you a mortgage where you got a special rate for a period before returning to the SVR. That is what you agreed and that is what is happening.

To be honest, you are at fault here. You were given a KFI which would have illustrated the monthly payment at the SVR when you took the mortgage 18 months ago. Whilst the rate is a little higher now it would probably only equate to around £50-£150pm higher than what it was then which is nothing in terms of a mortgage payment. You must have budgeted for most of the £512 increase because it was always going to happen.

Somerset

greenwood1 wrote: »

I had a 2 year fixed mortgage with Northern Rock. On expiry I renewed it with a Northern Rock 18 month fixed at repayments £688. Northern Rock have written to me as follows. Your mortgage expires on 1st May. Your new monthly payment will be £1200 an increase of (£512). !

There may be other factors here but purely on the mathematics ..... If the SVR is 7.34% ( lifted from google ) and the OP's payment will rise from £688 to £1200 ( assuming interest only ) then OP was on a rate of 4.2% ish. That rate does sound low i.e. there could be tie-in complications.

Northern Rock's SVR will increase by 0.25% from 7.09% to 7.34% pa, with effect from 1 February 2007.

homer_j_3

7.59% is the current SVR I think.

dunstonh

If it is an extended tie in (which is quite possible) then it is hard to see how the OP has got into the position of not being able to afford the increase.

When the OP signed up to the deal, the SVR would have been x% above base rate. Being a bit thick naiive, like most of the population, the OP may have assumed that the SVR would still be x% above base rate.

The interest rates now are only 1% higher then they were 18 months ago. That would be under £100pm based on the figures the OP has posted. So, effectively the unknown part of the increase is upto £100pm. Not the £512.

Someone taking on a mortgage payment of £1200pm during relatively low interest rates really has to allow for that mortgage to get to £1800pm although £1500 is the more likely maximum they would see for a longer term.

Trollfever

For the OP:

Repay the facilities provided by the Bank of England by:

• Contracting to a smaller and more sustainable business reducing the balance sheet from around £107 billion in 2007 to approximately £50 billion by the end of 2011
• Accelerating mortgage redemptions, with a target redemption level of about 60% after end of customer product period
• Discontinuing unsecured lending and it is proposed to also discontinue commercial lending (in addition to the closure of the Danish retail savings branch)

From:

http://www.northernrock.co.uk/keepinformed/news.asp