Renegotiating an existing mortgage?

TheJackal_2

We have an interest-only mortagage on a property which has considerably dropped in price since the last deal was agreed in 2006.

It is not up for renewal until 2011 but, are the lenders (Bristol and West) likely to get a bit difficult when we try to renew?

Originally it was based on an 80% LTV but now it would be in the region of 125%!!!

Will subsequent offers from the lender be affected by this?

Or as the lender didn't physically value the property in 2006, will this again happen in 2011 and a reasonable offer be made?

Any help would be gratefully received.

savemoney

I could be wrong and I am no expert but I would say it would effect you when you renewal given your LTV, you may find you will have problems getting another mortgage for the time being. Hopefully in the years to come you may have some equity

TheJackal wrote: »

We have an interest-only mortagage on a property which has considerably dropped in price since the last deal was agreed in 2006.

It is not up for renewal until 2011 but, are the lenders (Bristol and West) likely to get a bit difficult when we try to renew?

Originally it was based on an 80% LTV but now it would be in the region of 125%!!!

Will subsequent offers from the lender be affected by this?

Or as the lender didn't physically value the property in 2006, will this again happen in 2011 and a reasonable offer be made?

Any help would be gratefully received.

silvercar

The lenders should offer you deals that are available to existing customers. Getting a mortgage elsewhere with a 125% LTV would be impossible at the moment. Who knows what 2011 will bring.

oligeo

TheJackal wrote: »

It is not up for renewal until 2011

Are you trying to renegotiate a mortgage now? Or are you wondering what will happen when you renew in 2011?
If you don't need to renew til 2011, then I really wouldn't be worried about it now, you're talking 2+ years away!

Sarah

TheJackal_2

Thanks for that.

I suppose the question is, does the existing lender keep tabs on the value of the property or do they just renew regardless, as you are an existing customer?

It's not like the scenario where if I were to be seeking to re-mortgage with another lender and they would quite rightly have the property revalued.

To be honest, if they made the whole thing far too painful, either with exorbitant interest or fees, surely they would risk having to repossess quite a lot of their existing housing stock?

TheJackal_2

Just to clarify.

I'm not looking to re-mortgage now, just wondering whether I should envisage using some savings that I have made now, in 2011, to compensate the fact that the LTV might still be 125%.

If they are not likely to penalise me by refusing to offer me a competitive deal, I may as well leave my savings where they are rather than earmark them to reduce my LTV and obtain a better deal in 2011.

beecher

My lender updates what they think the value of my flat is, and use this value when I go for new deals. I'm not sure what they'd do if I was in negative equity but I assume that they'd only allow me to be on the SVR.

Who knows where we'll be in 2011 and what deals will be available - your best bet is probably to try to save as much as possible to try to get your LTV down if that is at all possible. Also make sure your plan for repaying the capital is in place.

savemoney

I wouldn't worry to much if I was you, hopefully 2011 things will pick up, what's worrying really is can the economy get any worse and job security etc

My fixed rate ends early next year but I am in no rush to get another deal svr is better than my fixed and I reckons rates haven't reached bottom yet

JayZed

Quite simply, you don't need to worry about it now as your deal doesn't expire until 2011. At that point you will presumably revert to your lender's SVR, and as long as you keep up the payments, no worries.

However, if you are still in negative equity when your current deal expires and you try to get another deal (e.g. fixed rate for X years) from your current lender, then they will value the property and you'll be out of luck. It doesn't mean they'll withdraw your mortgage or anything, you'll just be stuck on the SVR.

savemoney

Negative equity is only a bad thing if you sell or change mortgage. I had my 1st house in negative equity in the 90's for years and rates were much higher then up to 16% at one point. I was on a SVR at the time

TheJackal_2

Many thanks to all of you.

It looks like, SVR here I come!

Ironically, it's a pity this couldn't come sooner, tbh, as I'm on a 5 Year Fixed!!!