Together loan sees huge hike

Borrowers holding Northern Rock Together products who remortgage away from the lender could see rates more than double on the unsecured portion of the controversial product.

An unnamed broker says that when remortgaging a Together client he discovered they would be transferred by NR onto an APR of 16.8% when the deal’s unsecured loan element was detached from the mortgage.

The broker says he and the client are reviewing the offer because the terms of detachment were not made clear in the Key Facts Illustration. The client now faces repayment difficulties.

He says: “By moving the unsecured portion of the loan onto this APR, NR is effectively locking him into a high rate.”

An NR spokesman says: “Detachment terms will vary according to the original deal but may involve customers moving onto our SVR, currently at 7.49%, or just below that rate for the remainder of the term.

“In most cases the unsecured loan interest rate reverts to 8% plus SVR when borrowers remortgage away from NR.”

He adds: “It is also worth pointing out that the terms of the unsecured loan element and the interest rate it will move onto if decoupled from the mortgage are stated from the outset in the KFI.”

Caroline Davey, deputy director for policy and research at Shelter, says: “It is vital that mortgage providers lend responsibly and carefully assess whether customers will be able to keep up with loan repayments in the long term.”