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Where Will Northern Rock Borrowers Go?

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Mr Sandler's plan was to reduce the NR mortgage book by encouraging borrowers to move to other lenders.

They all seem to be closing their doors.

NR's mortgages in its latter stages were not the finest - 125% and so on. If they can't move, it looks like the NR SVR for them.

This won't help Mr Sandler in his aims but I should think that NR's solicitors are in for good times with all those possession actions.

How does the NR SVR look against its 'competitors' at the moment?

p-o-p

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I've just seen that Martin Lewis (MSE) is suggesting the following:

Remortgaging if you've hit the nuclear option (Northern Rock especially). The credit crunch means many who’ve borrowed 95% to 125% of their house's value will simply be unable to remortgage and are stuck at higher rates. One solution is to get a loan to fill the gap. For example, if you’ve a 100% mortgage, borrow 5%, thus reducing the mortgage size and allowing you to move mortgage deals. Plus, some loans (see Cheap Loans) are cheaper than costly mortgages anyway (see Remortgage Guide). Sadly, it won’t always be possible to do this, and there's a chance it can hit your income multiple.

The Size of the Saving. Someone with a 100% repayment mortgage for £100,000 at Northern Rock’s standard 7.6% rate pays £745/mth. Getting a £5,000 loan over 5 years at 7%, which costs £99/mth, may enable them to get a cheaper mortgage - e.g. a 2 year fixed at 5.29%, costing just £572 a month. Over the two years, incorporating loan, mortgage and application costs they'd be £800 better off. Plus the £5,000 loan will be paid off much quicker than it would’ve otherwise, saving interest in the long run too.

Peter.

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Since news of NR has died down, I reckon the consequences for it have got a lot worse, with the actions of other lenders tightening their belts. These highly leveraged customers won't be able to remortgage with other lenders and NR will be left to cover with any negative equity following likely reposessions.

That reminds me though weren't high LTV customers asked to pay a mortgage indemnity guarantee? Wasn't this intended to insure the bank against negative equity? Who is covering the insurance?

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I've just seen that Martin Lewis (MSE) is suggesting the following:

Peter.

I think that Mr Lewis might be being a little optimistic about someone getting a five year unsecured loan at a rate of 7% if they already have a 95% mortgage and £30K unsecured.

However, he should know. It's how he earns his living.

p-o-p

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And a little optimistic about getting a 95% remortgage - these have almost disappeared, you really need 10% now.

And with prices already falling and valuers downvaluing, anyone who took a mortgage of over 80% in the last 2 or 3 years, or over 50% if a newbuild flat, is at risk of not being able to remortgage or not at any decent rate.

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The Size of the Saving. Someone with a 100% repayment mortgage for £100,000 at Northern Rock’s standard 7.6% rate pays £745/mth. Getting a £5,000 loan over 5 years at 7%, which costs £99/mth, may enable them to get a cheaper mortgage - e.g. a 2 year fixed at 5.29%, costing just £572 a month. Over the two years, incorporating loan, mortgage and application costs they'd be £800 better off. Plus the £5,000 loan will be paid off much quicker than it would’ve otherwise, saving interest in the long run too.

OK, so that's the next 2 years sorted. What happens then?

The property value has dropped, so your £95K (£90K by then?) mortgage is now back to 100% (or worse). You end up back on SVR for the £90/£95K and you also have 3 more years of £99/month on top.

Look on the bright side the £800 you save can be used for remortgage fees in 2 years time :blink:

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I suppose this means that Mr Sandler probably won't be able to repay the 25 billion to the BoE.

If his business plan is out the window within a couple of months, is the bail-out going to be acceptable to the EU?

p-o-p

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They'll be stuck on SVR and have to economise in other areas, such as food.

So, to answer your question "That's why Northern Rock borrowers will go to Iceland!" :lol:

:lol::lol::lol:

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a porton wll end up selling

a portion will try staying on svr

a portion will remortgage elsewhere

a portion will hand they keysback

NR hopes not too many who hand the keys back are ultra sub prime

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Guest happy?
a porton wll end up selling

a portion will try staying on svr

a portion will remortgage elsewhere

a portion will hand they keysback

NR hopes not too many who hand the keys back are ultra sub prime

I'm of the view that people should never have been lent such sums in the first place. 125% LTV was not leveraging by any stretch of the imagination it was simple, wreckless gambling. Such lenders have not merely shafted the individuals that took-out these loans, they have damaged the UK economy for years to come because of the effects of house price inflation on all of us. Those that argue that this was a personal decision by one individual are relying on the false assumption that we each of us fully determine our own destiny all the time - it's an attractive idea but not entirely true.

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Guest happy?

If I was a NR customer in trouble because of increased interest rates I'd borrow some money from NR and stick it in an online account with NR and pay off the debt with the interest from NR. Apparently they've got some very good online savings deals at the moment and they're backed by the government.

NB - I got this financial idea from Adam Applegarth

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a porton wll end up selling

a portion will try staying on svr

a portion will remortgage elsewhere

a portion will hand they keysback

NR hopes not too many who hand the keys back are ultra sub prime

Hand the keys back works in the USA. Here you just keep the debt!

Can banks prevent you going bankrupt? Do creditors have to agree?

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I've just seen that Martin Lewis (MSE) is suggesting the following:

QUOTE

Remortgaging if you've hit the nuclear option (Northern Rock especially). The credit crunch means many who’ve borrowed 95% to 125% of their house's value will simply be unable to remortgage and are stuck at higher rates. One solution is to get a loan to fill the gap. For example, if you’ve a 100% mortgage, borrow 5%, thus reducing the mortgage size and allowing you to move mortgage deals. Plus, some loans (see Cheap Loans) are cheaper than costly mortgages anyway (see Remortgage Guide). Sadly, it won’t always be possible to do this, and there's a chance it can hit your income multiple.

The Size of the Saving. Someone with a 100% repayment mortgage for £100,000 at Northern Rock’s standard 7.6% rate pays £745/mth. Getting a £5,000 loan over 5 years at 7%, which costs £99/mth, may enable them to get a cheaper mortgage - e.g. a 2 year fixed at 5.29%, costing just £572 a month. Over the two years, incorporating loan, mortgage and application costs they'd be £800 better off. Plus the £5,000 loan will be paid off much quicker than it would’ve otherwise, saving interest in the long run too.

Peter.

Unfortunately that won't work in most cases.

Shoving the unsecured portion of a Northern Rock 125% or 5% of a 100% mortgage into an unsecured loan over 5 years will mean that the borrower may not be able to remortgage due to affordability issues as all lenders deduct existing unsecured loan commitments before calculating how much they can borrow.

That's the problem with the media, internet and chat forums, all of a sudden a load of unqualified numpties start giving out advice that could potentially put someone in a worse position than they're already in.

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  • 295 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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