Should I remortgage??

loopsntroops

My current mortgage is fixed rate with Halifax at 7.9%, interest only. The deal ends this September (I will be on maternity leave then and totally skint as living off SMP..but will still be able to make my mortgage payments at 7.9%).

On the halifax website the SVR is stating 3.50%. If I dont remortgage does this mean that after Sept my mortgage repayments will drop to match the 3.50%??

I was looking at their remortgage deals and it doesnt make sense to take on a new deal which leaves me with payments at 5.15% interest plus a fee of over 1K added into the bargain!!..if my mortgage will be 3.50% anyway??

Am I missing something or being totally daft???

I was hoping that I could act as follows:

Allow mortgage deal to end and go onto SVR rate (thus payments dropping) - then during maternity leave stay on this deal and the money saved on mortage deals could be saved up until I return to work in Feb 2010 - when I return to work in Feb 2010 go for a remortgage and opt for repayment and use the money saved to cover any fees etc.

Would this work??

Obv..if the interest rate is higher than 7.09% my payments would increase and then I would have to look at a new deal...but if the SVR is lower than my current rate of 7.09% why bother?

beecher

Yes you'll go onto 3.5%, or whatever the SVR is by then.

Keep an eye on the deals available at Halifax as that might be your first port of call.
http://www.halifax.co.uk/mortgages/halifaxmortgagecustomer.asp

The only thing to be aware of is your LTV as if you're presently near to 60%, 75% or 90% you might be better fixing sooner rather than later. If you don't know how much Halifax think your property is worth, phone them up and ask them.

TEDDYRUKSPIN

Your fixed deal should return to the halifax SVR! You are correct. Just be aware that they actually have two SVR! One if 1% higher than the other.

It is up to you. Nothing is wrong in what you do. It is correct that picking a new package will be higher than most SVR deals at the moment. The only reason people are picking fixed rates is that they believe that the rates will sky rocket again.

My thoughts? Unlikely. But everyone is different.

robbiecaratiger

You're right... When your deal expires you go on to the lender's standard variable rate (at least that's my rather limited understanding on it anyway).. You just need to consider is it worth tying yourself into a reasonable fixed term whilst the rates are reasonable, because looking long-term they'll naturally only rise.

If you have a good LTV, then you're rates are superb at present

loopsntroops

LTV? Loan to value..I guess mine wouldnt be too good as Im on interest only. I owe 75K on mortgage and have been working on home improvements to try and help boost my property value (installing new bathroom as we speak).

When I took the mortgage halifax valued my property at 90K but I reckon it may only be valued at approx 75 to 80K now (Prices in NI fell dramatically last year and I have been looking at current house prices locally). How would they calculate my LTV..would they do a new valuation and charge me or would they just deem the property at a lower value and cause me financial headaches!!!??

LTV does worry me alot..thats one reason I want to go onto a repayment mortgage next year or else I aint ever gonna be able to retire

beecher

Halifax use a computerised index - phone them up and they'll be able to tell you what yours is valued at. Halifax do give new deals to people with an LTV of up to 120% so you need to make sure you fix with them before your LTV reaches that level.

From what you've said it looks like you'll be unable to remortgage elsewhere (LTV has to be under 90%), so just keep an eye on the value Halifax have for your property and fix once your LTV gets a bit too worrying! Do be aware that Halifax don't have to offer deals for anyone with an LTV over 95% and their policy may change at some point.

loopsntroops

Just did the online property value calculator (nationwide I think)..not good. It states that my property is valued at 73K...is this LTV 123% or is my maths rubbish? Mortgage currently at 75K!!

Should I start to worry now!!!! :eek:

Could I drop to the SVR and hope it stays good..save the monies gained from drop in rate and then use these savings to cover the difference in equity??

Why did I become an adult!!! Life was much easier when I was little!!

beecher

Just phone them up tomorrow and see what they say - Halfax and Nationwide calculate my flat very differently so you might be the same.

Your LTV is 102% so you'd be ok with the Halifax atm. If the value was nearer 65k you'd be getting worried. That's why staying on the SVR might not be the best idea as values may continue to slide and you may not be able to get another fix when you want one, particularly if Halifax change their lending criteria and dont' give deals to people in negative equity.

It is a gamble which you might be happy to take - particularly as your mortgage is relatively low - but best to think about the long term pros and cons rather than what is cheaper now.

Probably best looking at it again in July/August and seeing what your LTV is, and what deals are available through Halifax then. Also we might have a better idea of when interest rates will rise which will help you make up your mind.