Advice please

Galaxy863

I'm hoping someone can help.

A bit of background info first. We bought our first house in April 2007, paid £123,500 for it, put £12,350 deposit down and added the £999 mortgage fee to the loan so the total loan amount was £112,149.00 which we took out over 35 (!) years.

We fixed for the first 2 years at 5.19% so our monthly repayments are £579.64 currently. We come off the fixed rate in May and as we're with Abbey the SVR is 4.24% so our monthly payments will drop to £516.43. We are hoping to fix our monthly repayments at £650 to try to reduce our LTV ( does anyone know if this is possible? )and will hopefully be able to pay a lump sum of around £1500 off later in the year, not alot I know but it's all we'll be able to save.

I know at some point the SVR will increase so we're hoping to fix before it goes too high. My question is will Abbey base our LTV on the valuation on the house when we initially took out the mortgage or will they change it due to the falling house prices? Just if they base it on the original valuation we will be around 85% LTV at the end of the year based on the current SVR, if not then I dread to think!

Any input would be appreciated

whu

Galaxy863 wrote: »

I'm hoping someone can help.

A bit of background info first. We bought our first house in April 2007, paid £123,500 for it, put £12,350 deposit down and added the £999 mortgage fee to the loan so the total loan amount was £112,149.00 which we took out over 35 (!) years.

We fixed for the first 2 years at 5.19% so our monthly repayments are £579.64 currently. We come off the fixed rate in May and as we're with Abbey the SVR is 4.24% so our monthly payments will drop to £516.43. We are hoping to fix our monthly repayments at £650 to try to reduce our LTV ( does anyone know if this is possible? )and will hopefully be able to pay a lump sum of around £1500 off later in the year, not alot I know but it's all we'll be able to save.

I know at some point the SVR will increase so we're hoping to fix before it goes too high. My question is will Abbey base our LTV on the valuation on the house when we initially took out the mortgage or will they change it due to the falling house prices? Just if they base it on the original valuation we will be around 85% LTV at the end of the year based on the current SVR, if not then I dread to think!

Any input would be appreciated

The LTV will be based on current prices not what you paid for it

beecher

They will change it due to falling house prices - you're unlikely to have enough equity to remortgage elsewhere. Unless you got an amazing bargain at the time you could well be in negative equity I'm afraid, especially as you won't have paid off much capital since your term is so long.

You could be lucky and Abbey could offer you a deal anyway - I'd phone them and ask.

Galaxy863

Oh well, thats what I thought would happen

I don't think we'll quite be in negative equity but I think our LTV is going to be in the region of 95-100% at the moment which is the reason I want to try to reduce it as much as I can.

I have spoken to my whole of market broker who basically said there's nothing out there and I just have to go on the SVR and try to reduce the LTV so guess thats what I'll have to do!

beecher

Why don't you phone up the Abbey and ask them what they value the house at, and ask if they have any deals they could put you on? Others on here have had new deals set up with Halifax when they've been in negative equity - it is worth a go.

Galaxy863

I think my broker rang them ( I had a meeting with her a couple of weeks ago ) and they didn't really have anything, I might give it a couple of weeks and ring them again. Although I think any offer will be alot more than the SVR so it might be better sticking on the SVR and overpaying while I can??

dimbo61

As you go onto the abbey SVR in May your mortgage cost will drop and if you can afford £650 a month then overpay every penny you can !
Even at the SVR of 4.24% you will not get a savings rate after tax to match that so overpay and if you do have/get £1500 then pay that off the mortgage as well.
always keep an emergency fund of 3/6 months income as a rainy day fund.
Contact abbey direct they may offer you a deal that they will not offer via a broker !!

winnie101

Hiya!

I am in the same situation as you our fixed rate mortgage finishes in May. I rang Abbey yesterday to see if we could move to a new deal and had a big shock. We bought our house for £320 K in May 07, it was never lived in and ten years old so we have spent about another £20K renovating it and we are no were near finished. Abbey has valued our house at £224K we have £216K left on our mortgage, at the time when we took the mortgage we thought £100k equity in the house was safe, how wrong were we!!!

Abbey have said we can move to SVR! Does anybody know if they allow overpayments on the SVR?

I would definitely phone Abbey you never know you may have better luck than us.