Northern Rock bad bank to refund ERCs
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Northern Rock Asset Management, dubbed the nationalised lender’s ‘bad bank’ operation, is offering to refund early repayment charges to customers looking for further borrowing with another lender.
Northern Rock Asset Management was created out of the restructure of the old Northern Rock, which separated the riskier mortgages and unsecured loans from the rest of the mortgage and savings books.
It can no longer offer new lending to its existing customers so home owners are having to pay ERCs in order to borrow more money elsewhere.
The lender has now said that it will look at these cases to see whether these exit costs can be refunded.
If borrowers with Northern Rock Asset Management find a deal with another lender, they will still have to pay the ERC then apply to Northern Rock who will look at whether the ERCs can be reimbursed.
A spokeswoman for Northern Rock says: “Customers who wish to take out further lending need to approach other lenders to do so.
“We will look at whether it is possible for us to reimburse the exit fees on their mortgage, but it is something we are looking at on a case-by-case basis.”
Meanwhile Northern Rock plc, the ‘good’ part of the bank, has today launched a mortgage with fixed rate deals from 3.69%.
The ‘Everyday’ mortgage range offers borrowers the ability to make overpayments of up to 10% each year, as well as the option to request payment holidays.
Everyday five-year fixed rate deals start from 5.19, while Everyday trackers start from 2.75%.
Lloyd Cochrane, head of mortgage products at Northern Rock, says: “Many customers have recently told us that while fully flexible features are nice to have, they don’t often take full advantage of them.
“We listen to our customers and these new ‘Everyday’ products will meet the needs of many people by offering competitive rates with the right level of flexibility for them.”
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Readers' comments (7)
Anonymous | 26 Jan 2010 9:23 pm
Looks like a good business opportunity for all those historic NR customers! I wonder when NR will communicate what's going on? Good on Mortgage Strategy to break this one..
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Richard | 12 Apr 2010 12:28 pm
I have received the letter form NR. Its an offer I would like to take up but have found that NR will not explain what all the criteria decisions will be based on... 'case by case' isn't good enough! It seems like a cheap way of getting customers out of the Asset part of NR in the hope they can get a refund but then denying it anyway. FSA and Ombudsman are aware...
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Anonymous | 17 Jun 2010 10:43 am
Hi, I am considering moving to another lender, but only if I am guaranteed the ERC refund, else it does not make it financially worthwhile.
Has anyone already gone through this process and received the ERC refund?
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Ian | 19 Jun 2010 10:51 pm
I have been through the process, two weeks after changing lenders received the total costs, over £7000, no dramas at all. I was very impressed!!!!
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NIck | 27 Jun 2010 9:16 pm
Requirement for eligibility is that you must increase borrowing with the new lender by a minimum of £3000 of the NR predicted redemption figure (ie inclusive of ERC), although the letter says this is for a limited time only no-one at NR was prepared to commit a date to that. Re-mortgage now complete i'm just waiting for refund with fingers crossed...
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Vivien | 6 Jul 2010 4:22 pm
I am forced to move due to disability and I'm 67 and I can only get a short-term mortgage. I can't now borrow anywhere near as much as my mortgage with Northern Rock. The amount I can borrow won't get me a suitable property in the UK so I'm forced to buy in Northern France where I don't need a mortgage. This seems to me to be a worse position than those who have to borrow more and can get it and yet I will have to pay £6,400 to redeem the mortgage early. I can't see any logic to the criteria Northern Rock are using. Are they likely to waive the redemption charge?
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Nick | 15 Jul 2010 10:14 pm
Further to my last, 2 weeks after completion of my new mortgage I received a cheque in the post for the full amount of the ERC applied to the redemption figure which was nearly £6000 - result! All I had to provide was copy of new contract confirming same property and new borrowing £3000 more than redemption figure. As I've moved to an offset mortgage, this was only a borrowing facility should I need it, and so I managed to get full ERC refund without actually borrowing a penny more. NR 0, Me 1.
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