Negative Equity

louisels

I am due to come to the end of my fixed rate mortgage deal (I bought my first home 2 years ago) and was planning on looking for another fixed deal. When I bought it, my home was valued at 125,000. I am saving as much as possible to reduce my initial loan of £119000 down to 12,410 to reduce my LTV down to 90% so that better deals are available to me when I look to switch deals after my current one expires.
HOWEVER - What I need to know is, when you switch lenders/deals is your house valued again or do they just use your initial valuation to calculate your LTV? If my home is valued again, I guess the value of my home could have decreased meaning that my LTV is actually higher than I thought - is this correct? Thanks in advance for your advice!!

beecher

Yes, your house will be valued again. Your best bet might be to see what your present lender will offer you first.

louisels

Thank you very much. Usually then, if you stay with the same lender can you switch deals (say, from variable rate to a fixed rate) without having to have another valuation?

Thanks again

ianbrown

We're with the Woolwich and towards the end of our fixed rate they wrote to us and offered us 3 options, a 3yr fixed, a 5 and a 10.
We rang them and it was done in about 30 mins, no fees or valuation.
HTH

opinions4u

louisels wrote: »

Thank you very much. Usually then, if you stay with the same lender can you switch deals (say, from variable rate to a fixed rate) without having to have another valuation?

Thanks again

Depends on the lender. Some will. Some won't. Who is your mortgage with?

The problem they have is that if you are in or close to negative equity, you are a high risk customer. Traditional lending rules say the higher the risk, the higher the rate.

The problem you have is that they have you over a barrel. You cannot take your loan elsewhere (unless you have equity). So you are stuck with whatever they have to offer even if it's not good value.

cwcw

I bought 2 years ago also, although we put 10% down and have paid a repayment mortgage since, and then paid 2% off the balance when the fixed tie in ended, but we managed to remortgage with HSBC.

The tracker option (90% LTV) we chose with HSBC had no fees - no valuation fees, or booking fees, or anything, so we figured we had nothing to lose. It was either fill in a bit of paperwork for the hope of saving 2% interest, or being stuck on the SVR of the current lender. We knew the value would have fallen but weren't sure by how much. The valuer who did the valuation for HSBC gave us a realistic range, which was slightly below what we needed, but said he'd do his best. A week later we had a letter from HSBC saying the valuation was ok for our mortgage.

So basically, if I was in your position I would take a shot at the HSBC fee free tracker because you have nothing to lose, interest rates are heading downwards, and for us it was pretty much the best deal anyway.

louisels

Thank you to both. I will look in to the HSBC option but am not very confident since house price falls seem to be dominating the headlines.

Currently with Nationwide. Their SVR isn't TOO bad at the moment and will hopefully reflect the interest rate falls that are expected so, come June, if we have to stay on that it won't be too much extra. I would prefer to be on a fixed rate as I hate the idea of being at the mercy of interest rate rises but this may not be an option.

I understand that we're technically 'high-risk' customers but as it is we have no problem meeting our monthly repayments, we're both in secure employment and earn more now than we did when we took out the mortgage - however, should the interest we're paying rise significantly then potentially we could struggle so it seems to be a bit of a vicious circle.

Kez100

The lenders won't be getting their information from tabloid headlines. They have their own internal statistics departments which provide them with facts on price movements (which are then released and used - along with other statistic sources - as tabloid headlines!).