Can NR charge us £1000 for moving elsewhere?

Mad_about_Money

maninthestreet wrote: »

Wait another year (if you can), then re-mortgage when the 3 year tie-in has ended.

To be honest, I have worked out that if I wait another year (to avoid paying back the £1000) I will have actually lost more money in terms of how much I am paying to credit cards each month (£200 minimum monthly payment for £11000) and my mortgage (£681 monthly payment on 99K) as opposed to setting up a new mortgage of, say, £110,000 (extra amount is to pay off credit cards) with a new lender on a fixed rate paying approximately £700 a month.

NEAS - No fancy car or holiday I'm afraid - just trying to get rid of my debts. That is basically why I am remortgaging. It's not that unusual, it it? I'm also well aware that property prices are coming down, but up here in Scotland where I live that isn't happening thankfully. Mine's was valued at 50K more than what I paid for it 2 years ago.

Many thanks for other replies btw.:T

silvercar

So you are planning on moving unsecured debt (credit cards) to secured debt (mortgage).

I would be very careful of doing this:

1. Listen to the adverts, your home is at risk if you don't keep up with repayments...you are committing yourself to larger payments over the next 20 odd years.

2. You are transferring short term debt to long term debt. You will be paying for this extra borrowing for the next 20 years.

3. If house prices fall and you have taken on a larger mortgage it could be difficult to move your mortgage in the future and/or to get a low rate of interest.

It would be far better to try and save some money and use it to lower your credit card bills. Keep the mortgage with NR until you are out of penalty time. £1,000 is a lot of money to throw away to gain an extra £10,000 of borrowing -its 10% of the extra!

homer_j_3

To be fair silvercar - credit cards are not short term debt in most cases.

The last figures I saw was that by paying min payment and not adding to the debt, it would take you 35 yrs approx to clear.

You are correct to say that the debt being secured is a greater risk though.

Mad_about_Money

silvercar wrote: »

So you are planning on moving unsecured debt (credit cards) to secured debt (mortgage).

I would be very careful of doing this:

1. Listen to the adverts, your home is at risk if you don't keep up with repayments...you are committing yourself to larger payments over the next 20 odd years.

2. You are transferring short term debt to long term debt. You will be paying for this extra borrowing for the next 20 years.

3. If house prices fall and you have taken on a larger mortgage it could be difficult to move your mortgage in the future and/or to get a low rate of interest.

It would be far better to try and save some money and use it to lower your credit card bills. Keep the mortgage with NR until you are out of penalty time. £1,000 is a lot of money to throw away to gain an extra £10,000 of borrowing -its 10% of the extra!

I appreciate your reply. However in Point No 1 you say be careful as I am committing myself to larger payments. I thought I was actually bringing down my payments by combining my credit card expenditure and mortgage (£200 + £681) to one payment of £700 per month on, say, a fixed rate mortgage(for mortgage of 110K) as opposed to £681 mortgage per month at the moment on NR's SVR (for mortgage of 99K) and £200 per month to credit card debt of £11000. This would be over 25 years but if I were to continue paying my credit card debt with the minimum payments as I am at the moment, would I ever get rid of that debt?

In point No. 2 you say I would be transferring short term debt to long term debt and as I pointed out above, because I'm only ever managing to meet the minimum payment on my credit cards, then surely this is the best way forward no? My current mortgage with NR is for another 28 years anyhow and transferring to a new lender at a lower rate for 25 years is working out cheaper.

I understand what you mean on Point No.3 about taking on a larger mortgage but our LTV rate would only work out at about 73% so there is still plenty margin for house prices falling and hopefully that will be a short term problem.

Viks

it seems reasonable to re-mortgage as your monthly payments will drop by £181 per month and if you save this up you'll have the extra £20,000 you remortgage in under 10 years just from your savings. (not taking into account the £1000 charge).

Personally i would still go for it as in the long run you will be saving money and you'll also be able to pay of the remortgage part of the loan in theory in about 10 yrs.

Also, either way you will have to pay the £11k credit card debt off - either at 30% with the credit card companys or then at 6-7% with your mortgage company.

Conrad

Scotland is not immune from the credit crunch thus falling prices are a feature there just as everywhere else.

You know almost daily someone tells me prices wont fall in thier area because of x y and z.
Laughable.

silvercar

I can see your points and it does seem logical to increase the mortgage, particularly if the LTV is only 73%.

You have these credit card debts because your expenditure exceeded your income, luckily your way out is to pay off the credit cards through the mortgage and borrow at a lower rate.

Don't make this a cycle, zeroing your CC balance onto the mortgage, then spending on your CCs and trying to transfer your debts onto an enlarged mortgage. Eventually the cycle stops and you are left with a much enlarged mortgage, CC bills and nowhere to go.

I have friends who have repeated this 4 times, now their mortgage is 180k and a period of unemployment coupled with a sick child has left them with high CC bills. Their LTV is only 50% but their credit rating has taken a battering and the unemployment has meant remortgaging is difficult at the level they now need.

MRSTITTLEMOUSE

Even if you just change products with them they will collect the help with costs back if it is within the agreed time.This has just happened to a friend of ours who did this.