Do you have a Northern Rock Together Mortgage? Read This.

[fatdog]

If you have a Northern Rock Together mortgage, the one that is a mortgage account plus an additional unsecured loan, then I’d like to hear from you.

Like you, I have this product and it the fixed rate product soon comes to an end. I’ve spent the past few weeks reading up on what is best to do with this ie remortgage or just sit on the SVR.

However, on reading the terms of the fixed-sum loan agreement I’ve found a few areas on the contract which are clearly debatable in a court and am currently preparing a case. In order to strengthen the claims, I am keen to find others in the same or similar position.

Here are the points I have:

1. This is not a concern as it plays in my favour, but the loan is for £30,000. It is unsecured and at the time of the agreement (late 2005) the Consumer Credit Act 1974 covered agreements upto £25,000. However this contract is a “Fixed-sum loan agreement regulated by the Consumer Credit Act 1974”. As this wording appears clearly at the head of the page, I am informed by numerous legal advisors that it cannot be argued that this agreement, despite not formally required to be covered at the time, is indeed covered by the Act and must fulfil the requirements of the Act in full, therefore:

2. The information regarding the terms of the loan must be clear. The document clearly sets out the amount borrowed and the term together with the APR percentage and the total charge for credit. However, it does not display the monthly payment amount, nor does it display the total amount payable. These missing areas fail to meet the CCA requirements. The view is that it should have stated the fixed payments for the first 60 months (eg £165 per month) and then stated a monthly figure based on the SVR at the time with “subject to change” next to it. Likewise the total charge for credit is incorrect as it is based on the SVR of 6.59% and not taking into account the 5 year fixed rate percentage.

3. At the foot of the first page, there is a paragraph which states “If you are not or cease to be a Borrower with us under the Mortgage, (or transfer to a new mortgage product with us, or enter into a new mortgage with us) a variable rate which will be 5.00% above our Standard Variable Rate will apply to this agreement.” I have shown this clause to a number of legal advisors and all agree this is an unfair term under the Unfair Terms in Consumer Contract Regulations 1999. The fact that when my five-year fixed-rate term comes to an end, regardless of keeping my business with Northern Rock I shall be penalised by 5% interest.

4. On speaking with Northern Rock recently about what happens to the loan contract at the end of the five-year fixed-rate term I am told (by at least three NR employees) that it will revert to the Standard Variable Rate (SVR). However the interest rate stated on the loan agreement states “So long as you remain a borrower with Northern Rock under this agreement, the following Interest Rate(s) will apply: a fixed rate of 5.79% until 1 January 2011 followed by a variable rate which is guaranteed to be below Northern Rock’s Standard Variable Rate, which is currently 6.59%, for the remainder of the term of the loan. Please note that the payments illustrated for this period of the loan, are based on Northern Rock’s Standard Variable Rate.” If I am reverted to the SVR at the end of the fixed term, this would be a breach of contract as this clause clearly states that it will be “guaranteed to be below” the SVR.

As I stated at the head of this posting I am currently instructing solicitors to draw up a complaint to NR regarding this contractual points and a follow up complaint to the Financial Ombudsman, however this complaint would have a much better grounding if others are in, or about to be in, the same position as myself and the complaint was from a group of customers instead of just one.

I’d also be interested in hearing from anyone that has already complained to NR directly or indirectly through legal advisors regarding these points – not in the case of agreements not signed by the customer.

I look forward to hearing from some of you in the same boat as me in due course.

[fatdog]

Just a quick update on this.

 

I've had my 'fixed-sum loan agreement' looked at by a couple of legal advisors. All agree this has several points to argue and are looking into whether anyone has actually taken NR to court over this to mark against any such existing test case.

 

Interestingly, all of the advisors I've spoken to claim they have had "an influx" of people questioning the legality of these agreements so it could be the case that many people are considering legal action against NR.

 

If you have one of these Together Mortgages with NR, I'd really like to hear from you - whether you have already looked into raising a complaint or not.

[williams101]

I have a Northern Rock Together mortage, Me & my ex partner took it out in November 2007, we were very naive at the time & did not understand the extend of the secured & unsecured part.

The outstanding unsecured loan is approx £12k & the house is up for sale I have been informed by NR that when the property sells we will have approx £10k outstanding on the mortage (as the house sale will not cover it) which will be tied into the remaining term of 27 years!! The mortgage is currently on the standard variable rate of 4.79% but they will put an extra 8% on top so £10k over 27 years @ 12.79% will mean paying back £44k, ridiculous.

If it is paid before the house sells there is no extra charge or interest it can just be paid off, which me & my ex are planning to do now by getting individual loans.

But in the mortgage agreement the section regarding the unsecured mortgage says that I will be sent all the relevant information regarding the loan which I have never received I phoned & asked for it & NR said it did not exist!! Also if I took out the mortgage in 2007 how come the unsecured loan in still under the old consumer credit act of 1974, is that right?

Im running out of time I need to find out if Im entitled to pay this loan as I am planning on paying it within the next 4 weeks.

I am trawling the internet trying to find answers.

[fatdog]

Williams101. Thanks for your info.

 

The one thing I've been told by the various people looking into my particular case is don't do anything rash! I'm ok for time at the moment, I still have a few months grace before my fixed-term comes to an end.

 

I see you're selling up ... I hope that's to move for other reasons than to get rid of the mortgage product alone.

 

It would appear yours has already come to an end. The one point you may have on your side is this .... have a look at your unsecured loan agreement. Does it say something like:

 

"So long as you remain a borrower with Northern Rock under this agreement, the following interest rate(s) will apply:

* a fixed rate of x.xx% until [date]

followed by

*a variable rate which is guaranteed to be below Northern Rock's Standard Variable Rate ..."

 

This appears on my agreement under the Other Financial Information section. If you are charged the SVR then your agreement is in breach as they are not honouring the 'guranteed below' SVR.

 

Incidentally my premium rate is 5% whereas you quote 8%. When was your agreement dated and what is the total loan amount?

 

I am hoping to hear back from a large legal team looking at all the issues I have raised with them later this week. As soon as I have any comments back (positive or negative) then I will post them here. The murmours so far appear positive that there are several points to argue over the legality of these agreements and whether they are unfair terms (ie the hike in premium of the rates).

 

The most concrete comment I have received is that if NR try to charge me the SVR on the loan element after the fixed term has ended, as opposed to the 'guaranteed below' rate then this would constitute a breach in the agreement and I could withold payment until the rate is adjusted. The problem here is that the payment is collected as a single direct debit therefore I am not in control of the payments ... if I cancel the DD then I would breach my mortgage repayments. This is potentially a very serious legal issue, similar to that of the PPI miselling cases of the last few years. Of course, you are already in this position as you are being charge 4.79% for both elements (I assume) but your loan element should be at a lesser rate if your agreement has the above mentioned clause.

 

There could be interesting times ahead for NR and it's many Together customers!

[spamheed]

I too have a Together Mortage, with the unsecured element being about £20k, I was advised by my solicitor at the time I took it out that if I settled the mortgage first then the unsecured element would attract an interest rate of 11%, this would (closely) match your own figures. This agreement was drafted in March 2006

 

It states on the Key Financial Information section of the agreement that:

 

The APR is 6.6% variable

 

It continues in the "Other Financial Information section by stating. Interest Rate:

So long as you remain a borrower with Northern Rock under this agreement, the following Interest Rates will apply:

A variable rate of 5.89%, which will be reviewed monthly and is guaranteed to be no more than 1.99% above Bank of England Base Rate until 01 May 2009, The BOE Base Rate is currently 4.50%

 

followed by

 

A variable rate which is guaranteed to be below Northern Rock's Standard Variable Rate, which is currently 6.59%, for the remainder of the term of the loan.

 

It continues with "If you are not, or cease to be a Borrower with us under the Mortgage, (or transfer to a new mortgage product with us, or enter into a new mortgage with us) a variable rate which will be 5.00% above our SVR will apply to this agreement.

 

My current statements state that both my Mortgage and Unsecured element are on Northern Rock rate of 4.76%, which I believe is their SVR

 

My fixed rate ended last year and I am now on the SVR, which I regard as a smack in the face when the BOE rate is only 0.5%, I too pay both amounts via DD as a single amount.

 

I have been informed that there is a case in hand where the agreement for the unsecured element is being fought with the argument of an unenforceable agreement and unfair terms, but I haven't seen anything concrete about it yet

Edited June 27, 2010 by spamheed

[CHRIS581]

Hi, Just a quick note - I am indeeed in the same boat - having sold the property before they secured, the unsecured amount, the extra large interest has kick in and TWICE now they have taken legal action (see my thread) and have pulled out at the last moment.

 

They (NR) and Eversheds don't seem to know what to do and it's all a mess - but I would be very interested in helping out with a multiple type case, quoting my experiences..

 

I currently pay a reduced amount that I can afford atm.

[Pinky69]

Subbing. I am currently putting a claim through the FSCS for a friend being mis-sold the Together Mortgage because of bad advice from a broker(no longer trading). The FSCS base their compensation on losses as a result of the bad advice. I'm not quite sure how to quantify these if she is asked what her losses were. She would otherwise have gone for a straight repayment mortgage so I suppose she could claim the interest on the loan plus fees. The probably have their own formula but I don't know what that is. Any advice would be welcome. I have subscribed for news of the loan legality and am very interested.

[Mike J 1973]

Hi

 

Interesting read and I would very much like to follow what happens, I had a together mortgage. I have moved the secured element onto a Buy to Let and am left with the Dlinked loan of about 27K and I am paying 5% over their SVR.

 

I have been looking to see if there is anything I can do, I have got a copy of my CCA and I did a Sar and to my untrained eye everything looks ok.

 

If you need any more information on my situation, or indeed I can help in anyway just shout out.

 

I have posted links to my agreement.

 

http://img504.imageshack.us/img504/7119/nrccap1.jpg

http://img179.imageshack.us/img179/4913/nrccap2.jpg

 

Edit - just thought, I seem to remember seeing on here the point about the SVR and I seem to remember that they charge 0.01% less than the SVR, but I will check my mortgage statement and let you know what it says on interest rates

 

Cheers

Mike

Edited July 2, 2010 by Mike J 1973

[Mike J 1973]

I have just had a quick look and the Northern Rock SVR at present is 4.79% so 4.76% the together rate is lower!

[rmart]

My daughters took out a together mortgage. They have since sold the property but still have part of the loan outstanding. The original loan was for £30k and they paid it off but for 9k. They are now penalised with high interest for the balance.

 

I would like to know if this loan was arranged according to the law as it also states it is covered by the 1974 CCA which it clearly was not as it was for more than £25k.

[CSC1]

I too have a Together Mortgage. My real problem with NR is that through its own dodgy lending practices, Together Mortgage holders are now paying the price. Because the product we have is, accordingly to the bankers, so risky and now so unfashionable, we are now treated as if we are the lepers of the secured loans world and we shall be made to pay for borrowing up to 125% LTV.

 

I have just come out of a fixed rate deal, which was for the first 3 years. With base rate at 0.5%, I had been enjoying a rate of 2.39% for about the past however many months. Suddenly, overnight, my rate has doubled, increasing to 4.75% (a whopping 0.04% below the SVR). So, my mortgage + unsecured borrowing element has increased from about £450 monthly to £895 monthly.

 

Now, before all of the "I told you so" crowd come flocking to this forum, I am well aware that I have enjoyed an artificially low rate for a good while now. Artificial in the sense that interest rates (and base rate in particular) are very low and can only go one way. But then again, anyone other than those is high fixed rate deals have had it good for a while. I am no different.

 

What I take exception to however is that Northern Rock - a nationalised institution - has cornered me to the point where I have very, very limited options in what I can do from a negotiation or remortgage standpoint. Notwithstanding the market conditions of course, which I acknowledge. Despite their website stating that for existing customers, ring us and we'll see what we can offer, the offer was in fact 4.75% take it or go elsewhere. And that's where the problem is......

 

My mortgage LTV is about 93%. That means that in the current environment, I cannot go elsewhere and NR knows this. Of course, if I had 60% LTV then I could get a very attractive rate, but I don't and very few Together Mortgage holders will have LTVs under 90% I suspect. We are indeed a niche and exclusive crowd.

 

While I can appreciate lenders wanting customers to stump up more in cash deposits for new borrowing because the world has changed, NR has to recognise that its borrowers cannot simply pull up to 40% of their mortgage from thin air and so go to another lender for a more attractive rate. Basically, we are stuck where we are and in the event that we do move, unless we can also move the unsecured element also, that will attract interest more akin to a personal loan than a mortgage.

 

The solution as I see it is that we want NR to recognise its part in creating this situation and to offer Together Mortgage holders a fair deal. I have not become an increased risk overnight. I am not behind on my loan. I therefore feel I deserve a better rate than is on offer, because I cannot move my mortgage and if I do, whatever gain I make in a lower rate will probably be eaten up by the increased rate I have to pay on the unsecured element.

 

I cannot see this as treating customers fairly, nor within the spirit of the unfair contracts regulations [legislation?].

 

My purpose in coming on to the forum is to find out whether anyone is either part of a group in litigation with NR (e.g. a class action) or who knows of any group considering this route.

 

Any information most welcome, as indeed any comments on what I have written.

 

Regards

[fatdog]

CSC1

 

In short (and to directly reply your PM to me) I have a laywer who has stated their is definitely a case for NR to answer in court. The problem however is that the case costs will run into several tens of thousands of pounds as NR will no doubt want to defend to the death in order to avoid paying out potentially tens of millions of pounds in write-offs and compensation claims.

 

The lawyer has told me to find an insurance policy that will cover a legal claim against a bank - and I've hit a brick wall. No insurance policy with legal cover will pay the costs of taking a financial institution to court!

 

If anyone knows of one please let me know!

 

To answer your other question, I would definitely be interested in taking up a group litigation process against NR and I think this will be my next course of action in absence of insurance as the costs can be split several ways.

[CSC1]

Fatdog,

 

Am prepping my complaint to NR and undoubtedly on to the Ombudsman, but plan also to hit some other forums to see whether there truely is a market out there for group action from Together customers.

 

I'll keep in touch - perhaps we can devise a plan!

 

Best regards

[Ian Brooke]

Hi Fatdog, my mortgage situation is very similar to yours. I've sent my complaint to the FOS on different grounds (irresponsible lending) and the initial response was negative. I too am contemplating going to a Solicitor or claims firm, but think if more "victims" get together we would stand a better chance. There are some differences in my situation which are easier to explain verbally, would you be interested in exchanging phone numbers?

[fatdog]

Ian

Yes I'm happy to exchange numbers. I will PM you shortly.

[Hillsey]

I also have one and am in the process of going to court as the want to repossess us. I would be very interested in hearing of any progress that is made. I would also be more than happy to join in any legal challenge over the terms of the £30k drawdown, which is an unsecured loan.

[fatdog]

Just to update everyone. I have spoken with a fellow cagger on the phone about this. I think what we're likely to do in canvass a few lawyers to see if they'd be happy to potentially take on a group action against NR for this product. Typical charges are £250 an hour.

I have tried to find an insurance policy to help with the costs but have had absolutely no joy on this front.

If you're willing to be part of a group action then please PM me with some contact details (phone and email addresses are best/easiest) and we'll start to put things together and see how many people would like to get this sorted once and for all!

[Smilerman]

In a similar position, Mortgage fixed rate of 5.99% until 1st March 2011, I have 176k outstanding on the mortgage and 27k on the unsecured loan. Zoopla estimates my house at 231k, I am more realistic at 205k, had a Financial Advisor in who suggested I sit tight with NR as there was nothing he could do, but with one expert predicting 8% I am very worried. As I am currently paying 5.99% I will gain in the short-term (currenlty 4.79%) on both the mortgage and the unsecured loan, in which case I will put the difference to overpaying, the loan. However, that is not going to make much of a difference for sometime, which leaves me stuck with NR and doomed if SVR goes up, the only thing I do there is take a payment holiday and set the money aside to meet the increased monthly costs.

 

My agreement states the same as the first post. Any update here?

[Debvfm]

Hi

 

I am in the same boat with NR and their 'together' package. I would be happy to progress with any action that might be of benefit.

[mcAteer4]

Any more news on this? I've had a look at my terms amd conditions and it is the same as the above. I have a cousin who is a solicitor so I will try to call him this week some time to see what he thinks.

 

I've been on the NR SVR for the past year which is 4.79% and as most of you know it states that " a variable rate which is guarabteed to be below NR SVR". So I have been paying their SVR all year.

[clairbear2222]

I've just joined the forum to follow this topic as my partner and i have a 'together motgage' that we entered into in August 2007 (mortgage £159000 + loan £30000 = £189000, recent house valuation - £175000). I am keen to hear of any developments on this subject as we both feel so frustrated at being stuck with the Nrthern Rock with no hope of moving/remortgaging (we need to move as our family has outgrown our house).

[erinholly]

Hi

 

Im in the same boat as everyone else with the Northern Rock Together mortgage.

 

Ive only just suspected that there was something not quite right with this deal so im pretty new to all the hype.

 

If you have any info that may help me and my wife it would be appreciated.

Edited September 21, 2010 by erinholly

[laalinz]

I to have a together mortgage with NR, FR comes to an end August next year so subbing with interest.

[Crokeria]

I spoke to NR today and the lady was very sympathetic but pointed out that because of the bail out they CANNOT offer is new deals (they aren't allowed to) so as most of us have no equity we are stuck with them in an unhappy marriage. I do feel that because they are government owned, they won't jack up the SVR irresponsibly. The SVR is less than I was paying on my earlier deal so for now I'm OK. I would suggest we all OVERPAY to insure ourselves against SVR increases and pray for a market recovery. BUT until the banks relax a little and start lending without demanding a 40% deposit, the market won't recover. Why doesn't the government FORCE NR to lend to responsible working people.

[suly80]

I have a together mortagae too however my fixed term finnished 3 years ago and have been on svr since, got all ny contracts and it does seem that things arent right.