Fixed rate ends in December. Please help.

spleencheesemonkey

Hi all, and thanks in advance to any replies.

Me and my girlfriend bought our first house in December 2006 with a value of £115,000 with a mortgage value of £100,500 fixed for 2 years through the Halifax.

In today's uncertain economic climate we're wondering what to do. With the house's value at £115,000 2 years ago, we managed to make the 90% LTV so were able to get an affordable deal. However I heard that house prices may have fallen by as much as 20% which would make our house worth £92,000. If this is the case, would we struggle to find a competitive rate of mortgage and would we find ourselves in negative equity? Our outstanding mortgage currently stands at about £98,000. Do any of you have any estimates as to what the house might currently be worth?

We are trying to decide whether we should hold out and stay on their variable rate for a while and see what happens in the hope of getting a cheaper fixed rate (which may become available in the coming months) or whether to fix for another couple of years at the risk of paying over the odds for another two years.

If we stay with Halifax, will we avoid having the house valued again? Is it worth saying to an estate agent that we're looking to put the house on the market to get it valued for free to see whether we qualify for lenders maximum LTV offers?

I know it's a case of if you can afford to fix the rate for another couple of years then we have peace of mind that that is what our mortgage will cost us, but I get the feeling that every day we wait longer, the less our house is worth.

I hope I've made myself understandable, and I know that nobody really knows what's going to happen in the coming year, but any advice is greatly appreciated.

Many thanks.

beecher

Halifax use a computer program to calculate house prices. You may be lucky - my fixed rate comes to an end in December and they calculated my flat as being worth £150,000 when in reality they're selling for under £120,000 now.

Do you have an online account? If so you can go online and see how much equity they think you have which will give you an idea.

I'd advise you to phone them up and ask them what deals are available - that way you'll find out what LTV they calculate. You'd be able to get a deal from now - unfortunately they went up quite significantly last week so you'll have to pay £999 to get any deal with the Halifax, and their deals aren't looking as competitive as they were. Still cheaper than the SVR though.

Have a look here.

https://www.halifax.co.uk/mortgages/newdeal.asp

spleencheesemonkey

Equity available £5,500.

How will this help me give an idea of what they value the property to be worth?

Also might be worth adding after reading another post in the forum - I have gone over my overdraft limit 3 times in the last year by about £20 each time. Will this have an effect on my credit rating? I read of one lady who had her mortgage withdrawn on the day of completion due to this.

When we saw the halifax a couple of weeks ago they said that there would be no need to re-do the credit check as we were already a customer. If there is a possibility that another lender would refuse lending to us because of this, would it be another reason to stay with the Halifax?

Thanks.

beecher

I'd personally stay with the Halifax if I were you - they've calculated your house as being worth £98,000 + £5,500 = £103,500. You'll just squeeze into their LTV of 95% or less but I doubt you'd do so if you got your house valued by another lender.

In my opinion you should book a deal with the Halifax asap - 5 year fix is 6.69% for your LTV. That looks to me like the best deal you'll be likely to get. If you book it, you should be able to change deals if a better one becomes available through Halifax before the end of December - others on here have done so in the past few weeks. Good luck

spleencheesemonkey

Thanks a lot for your reply.
Do you know if we would have to reserve the new deal (at a cost?) with the Halifax? If so, would there be an additional cost of cancelling the reservation if a better deal comes before the end December. I am keen to avoid any extra costs of leaving our current mortgage before the end of the fixed period.

beecher

Others have said that they've booked a deal, and been able to change when a better deal comes up by just phoning. I was happy with what they offered me a couple of weeks ago so went with it, so don't know the exact procedure. Have a look at this thread though and it should help

http://forums.moneysavingexpert.com/showthread.html?t=1184245

Your deal will begin on 1 January so there will be no problem with Early Repayment Charges.

markelock

for info, last year I borrowed on top of my halifax mortgage, and their system overvalued my property by at least £30k also.

you may well be in luck

does make you wonder whether the market is in an even worse position of course if everything is overvalued.

nick1977

Everyone will have a different opinion on this, but with a product fee of £999 and a relatively small mortgage, you've got to consider whether it's worth plumping for fixed rate at the moment. If it were my money I would stick with the SVR for a little while and keep a close eye on what happens, as it is currently only about 0.3% higher than most of the Fixed deals Halifax are doing.

Nick

*EDIT* Sorry should just say that as you are not due to end your current deal until December, even more reason to sit tight at the moment and keep a close eye on the rates, deals etc.

Bog_Brush_2

beecher wrote: »

Halifax use a computer program to calculate house prices. You may be lucky - my fixed rate comes to an end in December and they calculated my flat as being worth £150,000 when in reality they're selling for under £120,000 now.

Remortgaged with Halifax a week or so ago. The computer calculated value of our house £2000 more than we paid 18 months ago. No credit checks were made that I am aware off.

Bog

beecher

nick1977 wrote: »

Everyone will have a different opinion on this, but with a product fee of £999 and a relatively small mortgage, you've got to consider whether it's worth plumping for fixed rate at the moment. If it were my money I would stick with the SVR for a little while and keep a close eye on what happens, as it is currently only about 0.3% higher than most of the Fixed deals Halifax are doing.

Nick

I'd see the point in this if it wasn't for the fact that the LTV is so high. Stick with SVR for a while, and you might find that the Halifax value the house a little bit lower, meaning the OP can't get any sort of deal other than the SVR.

nick1977

beecher wrote: »

I'd see the point in this if it wasn't for the fact that the LTV is so high. Stick with SVR for a while, and you might find that the Halifax value the house a little bit lower, meaning the OP can't get any sort of deal other than the SVR.

Yes I did think of that actually (and should've mentioned it I guess!) but even that considered I would stick with SVR. I know no-one can predict what the future will hold, but I would make an educated guess that interest rates will drop within the next 6-12 months, and that should lead to some better deals (eventually), and even if not, the SVR should drop a bit, negating any of the benefits of the fixed rate deals currently on offer. If there were no fee it would be a different story, but a £999 fee on a <£100K mortgage with a not very attractive rate isn't particularly tempting for me.

Just my twopence worth!
Nick