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Together mortgage: a wee word of caution!
Member Name: ShoppingGirl
Date: 24/05/01, updated on 24/05/01 (7147 review reads)
Advantages: Allows first time buyers a foot in the door.
Disadvantages: Comlicated loan structure, potential pitfalls.
If like me, you are a first time buyer in an area with crazy house prices, you may be very impressed with Northern Rock's Together Mortgage.
It is the only mortgage of its kind, in that it allows you to borrow not only 100% of your dream home's value, but a further 20% or even 25% on top of that.
In Scotland, we have a system of bidding at 'offers over' an upset price - sometimes these bids can get crazy, particularly in Edinburgh and other cities. It is pretty much unheard of to be able to buy a decent house in a decent area at exactly the valuation price.
So unless you have a big wodge of savings (as opposed to the mountain of debt that most of us have!) or a very helpful daddy (Prince Charles, for instance) then a competitive bid is basically out of your reach.
Yippee, I thought, when I took out my Together mortgage. I can bid with the big boys now! And sure enough, after some initial heartbreak and a few lost survey fees... I found a flat!
Hurrah. Except for one small thing that my (otherwise very helpful) Northern Rock adviser neglected to tell me. The mortgage is very complex in its structure - one part of the loan is secured on your property, and the other part is more like an unsecured personal loan. Here lies a small problem.
When you are going through the stress of conveyancing (the legal hoo-ha that has to be done before signing missives) you are constantly aware that your money has to appear in time for you to move in. This is not normally a problem, as the mortgage will be processed in around 4 weeks.
However, that unsecured element of your lovely Together Mortgage is subject to the Consumer Credit Act, and carries with it a mandatory 7 day cooling-off period. The seven days begin when you sign your loan papers. This weeks waiting time could potentially put you into a bridging loan situation, if you have an early entry date.
My own experience is that I am now ready
to move in, all the conveyancing is in place, and I have now had to revert to the a later entry date than I had anticipated.
It's not the end of the world, but I'm glad my solicitor has alerted me today, as I was planning to order carpets and furniture (wahay!) this weekend.
Ok, so it's all for our own protection but it's a hassle most homebuyers could probably do without.
In general terms, I have found Northern Rock to be really helpful, friendly and willing to discuss any problems I have had. However! I am very aware that until that loan is signed I am still only a potential customer, and therefore to be treated like a princess!
I will get report on this one when I have been with them long enough to judge their service objectively.
Do look out for that cooling off period, and plan your entry dates accordingly.