Mortgage recalculation
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bizgirl
Posts: 25 Forumite
Hi all,
This is probably a silly question, but I'm pretty clueless about this stuff, so apologies in advance!
I recently bought a new place with a 70/30 per cent loan to value. I took out a five-year fixed rate which will come to an end in August 2022. By the time I get to that point the loan-to-value ratio will be 60/40 per cent.
My question is this: when I take out a new deal with the bank at that stage, will they calculate my repayments on the 70/30 or 60/40 ratio? Obviously the latter would be better because the rates will be quite a bit more favourable.
Thanks!
This is probably a silly question, but I'm pretty clueless about this stuff, so apologies in advance!
I recently bought a new place with a 70/30 per cent loan to value. I took out a five-year fixed rate which will come to an end in August 2022. By the time I get to that point the loan-to-value ratio will be 60/40 per cent.
My question is this: when I take out a new deal with the bank at that stage, will they calculate my repayments on the 70/30 or 60/40 ratio? Obviously the latter would be better because the rates will be quite a bit more favourable.
Thanks!
0
Comments
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The up to date ratio will be the ratio used.I am a Mortgage Broker
You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0 -
That's good news, although I've just put some figures into a mortgage repayment calculator, and because my term will obviously be 5 years shorter by that stage, the mortgage repayments will actually be £30 more expensive every month. Not so great!0
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if the rate is lower the payment will be lower even on the shorter term.
What's the Current deal with the 70%LTV and what rate would you get on 60%LTV?0 -
That's good news, although I've just put some figures into a mortgage repayment calculator, and because my term will obviously be 5 years shorter by that stage, the mortgage repayments will actually be £30 more expensive every month. Not so great!
By 2022. Any improvement in LTV could be wiped out by higher interest rates in general. To minimise any impact you'll need to overpay your mortgage. As the determining factor is the mortgage debt you owe. This is the only thing that you have any control over.0 -
Thanks for your replies!
Getmore4less - I'm currently on a rate of 2.09% with a 70/30 loan to value. Just checked with my bank and they're currently offering a deal at 2.05% for 60/40 LTV fixed for five years - so not actually much of a saving at all!
When recalculating your rate for a new fix, I assume the bank take into account the new total of years you have left on the mortgage - meaning the monthly payments will most likely be higher anyway. Is that the case?
Thrugelmir - I've used the calculator on this site and if I overpay on my mortgage by £6k a year apparently I will pay the whole lot off a whopping 7 and 8 months early, which is fantastic! Although finding £6k extra a year might not be so easy...0 -
Thanks for your replies!
Getmore4less - I'm currently on a rate of 2.09% with a 70/30 loan to value. Just checked with my bank and they're currently offering a deal at 2.05% for 60/40 LTV fixed for five years - so not actually much of a saving at all!
When recalculating your rate for a new fix, I assume the bank take into account the new total of years you have left on the mortgage - meaning the monthly payments will most likely be higher anyway. Is that the case?
NO you will have a smaller debt on the lower rate
Thrugelmir - I've used the calculator on this site and if I overpay on my mortgage by £6k a year apparently I will pay the whole lot off a whopping 7 and 8 months early, which is fantastic! Although finding £6k extra a year might not be so easy...
if you started with 70% LTV £140k full term of 25years
£140,000 2.09% 25years £599.55pm
After 5 years you owe
£117,523 @ 2.05% 20years £597.32pm0
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