The Mortgage Clinic: How do I escape from Northern Rock's SVR?


I bought my flat days before the Northern Rock crisis, on a 4.89 per cent fix with the same bank that ends in October. I have 60 per cent equity in the flat, but my mortgage is seven times my income. However, I am due a pay rise – would I qualify for Woolwich's lifetime tracker or should I resign myself to the 7.49 per cent Rock SVR? PS, by email

Northern Rock's near-collapse continues to cast a long shadow, especially for borrowers like you, who face a mighty jump in repayments at the end of a cheap deal.

Last week, research from the analyst Moneyfacts found that the average two-year fix had crept up to 7.07 per cent. So anyone coming to the end of a three-year fix and looking for another one could expect to pay another £158.23 monthly (per £150,000 slice of a mortgage) – that's an extra £5,896.28 between now and 2011.

Your particular circumstances, however, point to a brighter outlook, although the jittery British mortgage market could mean you may struggle unless you move quickly to bag a deal.

First, your chunky 60 per cent equity stake should find favour with rival lenders, according to Andrew Montlake, of broker Cobalt Capital. "While much has been made of the mortgage malaise and the difficulties of remortgaging for some, the reality is that quality applicants should not have much of an issue and still have 1,000 or so products to choose from."

Add your unblemished credit rating to the mix, he adds, and the Woolwich lifetime tracker at 5.74 per cent should be within your grasp, as is Cheltenham & Gloucester's "Fair Weather Mortgage" tracker, which, at 5.99 per cent, "is competitive and allows you to switch to a fixed rate at any time without penalty".

Other advisers, however, are less sanguine about your position – a particular concern is that your income multiple is still very high. "Let's not pretend that the landscape hasn't altered dramatically," says David Hollingworth, of broker London & Country. "Although you don't say what your salary is, even at the reduced multiple of 5.5 times income, it could prove difficult to find a lender keen to lend that amount."

To this end, in the short time available and savings permitting, he suggests "overpaying as much as you can on the remaining cheap rate". Ray Boulger, of broker John Charcol, says it's also worth noting that Lloyds TSB has recently struck a special deal with Northern Rock to offer home loans to existing customers such as you, as long as you meet the criteria. Although it has yet to announce what rates it will offer, keep an eye out for these, because they could offer a cheaper alternative.

Send us your questions and you could receive £50 to spend at Amazon

Foxed by jargon? Worried by the credit crunch? Email a question to mortgageclinic@independent.co.uk. We will not reveal your identity, and we cannot give specific advice. If your question is printed, you'll receive a £50 voucher from Amazon.co.uk, so you can kit out your home with anything from a lawnmower to an espresso machine. www.amazon.co.uk/homeandgarden

PROMOTED VIDEO
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Selby Jennings: Oil Operations

    Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

    The Jenrick Group: Night Shift Operations Manager

    £43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

    SThree: Trainee Recruitment Consultant - LONDON

    £20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

    Day In a Page

    Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

    'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

    Yazidi girls killing themselves to escape rape and imprisonment
    Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

    Ed Balls interview

    'If I think about the deficit when I'm playing the piano, it all goes wrong'
    He's behind you, dude!

    US stars in UK panto

    From David Hasselhoff to Jerry Hall
    Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

    Grace Dent's Christmas Quiz

    What are you – a festive curmudgeon or top of the tree?
    Nasa planning to build cloud cities in airships above Venus

    Nasa planning to build cloud cities in airships above Venus

    Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
    Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

    Clocks, rifles, swords, frogmen’s uniforms

    Surrounded by high-rise flats is a little house filled with Lebanon’s history
    Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

    Four months after the bombardment, Gaza’s wounds are yet to heal

    Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
    Gastric surgery: Is it really the answer to the UK's obesity epidemic?

    Is gastric surgery really the answer to the UK's obesity epidemic?

    Critics argue that it’s crazy to operate on healthy people just to stop them eating
    Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

    Homeless Veterans appeal: Christmas charity auction

    Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
    Pantomime rings the changes to welcome autistic theatre-goers

    Autism-friendly theatre

    Pantomime leads the pack in quest to welcome all
    The week Hollywood got scared and had to grow up a bit

    The week Hollywood got scared and had to grow up a bit

    Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
    From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

    Panto dames: before and after

    From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
    Thirties murder mystery novel is surprise runaway Christmas hit

    Thirties murder mystery novel is surprise runaway Christmas hit

    Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
    Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

    Anne-Marie Huby: 'Charities deserve the best'

    Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
    The botanist who hunts for giant trees at Kew Gardens

    The man who hunts giants

    A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there