Northern Rock borrowers win High Court case

Northern Rock Asset Management has been told to back pay interest and fees to some customers following a High Court ruling on Northern Rock’s Together mortgage.

In a 20-page High Court judgement published yesterday (10 December), it is ruled paperwork relating to unsecured loans of between £25,000 and £30,000 taken out between 1999 and 2008 was incorrect and customers should be paid back interest and fees.

Between 1999 and March 2008 Northern Rock entered into a large number of unsecured credit agreements, as part of a product called the Together mortgage.

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This allowed borrowers to borrow up to 95 per cent of the value of their home on a secured basis, and in addition to take out a fixed sum unsecured loan of up to 30 per cent of the value of their home, capped at £30,000.

It was an advantageous feature of the product that, for so long as the secured loan remained outstanding, interest on the unsecured loan was charged at the same rate as in respect of the secured loan.

The defendants in court were two people who borrowed on such basis, their unsecured loan being the maximum of £30,000.

Northern Rock wanted the court to resolve a dispute between it and some 41,000 other borrowers who stand in the same position as the defendants as to how the Together mortgage contract could be interpreted.

The court ruled the paperwork for the unsecured credit agreements entered into by Northern Rock between 1999 and March 2008 did not differentiate between regulated and unregulated agreements, in that the same documentation was used for unsecured loans of more than £25,000 as was used for loans of £25,000 or less.