LVR & re-mortgaging - really worried

clairehi

poonum wrote: »

indeed our monthly payments will be £100 cheaper on that (we plan to overpay). But I'm very worried about what will happen when rates start to rise and we are stuck on the SVR unable to get another product because our LVR is too high. quote]

What I am planning to do when we come off our fixed rate onto lifetime tracker BBR+0.99) is to put the saving into a deposit account so we do not get used to having the extra cash and spend it. I will be keeping an eye out for a decent fixed rate, but if this does not come along and rates rise again beyond our original monthly payment, I will still I hope have the money saved on deposit as a cushion.

if I do secure a good new fixed rate, I will have the option to use the savings to pay off a chunk of the capital at the time of re-mortgaging.

posters here have advised people in my situation to use the savings to overpay but I would rather keep hold of the money until I know what my "next" mortgage deal may be. if I had used all the savings up on overpayments and then interest rates suddenly spiked, it could put us in difficulties.

hope this idea may help you.

tbrain

They are probably using the Halifax House Price calculator http://www.hbosplc.com/economy/housepricecalculator.asp which generate values based on all sale prices within a region e.g. West Midlands rather than right down to towns / villages.

Joe_Bloggs

@Tbrain
Nationwide mention how they get their data in their House Price Index Methodology Guide. Their statistics come from :-

All house price information is derived using Nationwide mortgage data. This data is extracted monthly for mortgages that are at the approvals stage and after the corresponding building survey has been completed. Approvals data is used as opposed to mortgage completions since it should give an earlier indication of current trends in prices in the housing market.

The guide is very informative.
J_B.

poonum

Ok thanks for all the advice - I know there are a lot of us in the same boat at the moment. We're more than happy to sit on the SVR until rates start to go up again - I will just have to keep my fingers crossed that rates won't go up until the housing market starts to pick up again, by which time our house should be gaining in value again.

One more question - we do have around £8k in savings which we have been saving up for nearly 2 years. It was going to be for doing the house up this year as it really needs (and I mean RALLY needs!) a new bathroom and carpets. We were so excited about getting these things done and were about to go ahead but... do you think it would be more sensible to hold it back for now in case we need it when rates go up again?

poonum

Payless - are you saying that we'd also have to move our separate 50k mortgage to another lender along with the 140k one? We are on year 2 of a 5 year fixed on the 50k one so I would have to pay an early redemption to NW if I did that??

koexelek

luckyfool wrote: »

Nationwide SVR at 3.5% is better than 99.9% of new products on the market anyway so its no great hardship in the short term allowing it to revert onto this deal.

Spot on. A lot of borrowers could only dream of being on a product like that.

payless

poonum wrote: »

Payless - are you saying that we'd also have to move our separate 50k mortgage to another lender along with the 140k one? We are on year 2 of a 5 year fixed on the 50k one so I would have to pay an early redemption to NW if I did that??

assuming one same property - then they are actually one single "first charge" not 2 mortgages - so YES and yes to penalty as well ( unless they offer otherwise- unlikely but you never know these days)

Judith_W

I'm in a similar situation, just hoping that the only reason that rates will go up on SVR would be because housing prices have started to rise again. This would suggest that the economy is recovering and as a result the BoE have increased the rate to reflect this.

Fingers crossed anyway

Markus_WellBelly_MD

Poonum,

You say that you have £8000 saved for doing up the house but youre not sure if you'll spend it soon. What interest rate are you getting from your savings account? is it an isa?

Now that you are going onto NW's svr you could make that 8K as an overpayment to your mortgage. There are no restrictions in the amount you can overpay on their svr plus you can draw the money back at any time (takes about 10 days). If you are a low rate tax payer you'd have to be earning 4.4% interest (high rate 5.8%) from your savings to beat the money saved in reducing your mortgage debt. Plus it's simple to do.
This is what I'm doing because I haven't decided on a better investement vehicle and I can't see any downsides.

Markus

Markus_WellBelly_MD

oh forgot to say that there are no charges made by NW whilst on their svr for either overpaying or drawing back

markus