LTV on remortgages??

skintdude

Hi,

I have had a mortgage with my friend for over 3 years now.

I now want to get a place of my own with my girlfriend and hand over the mortgage to my friend. Just 1 quick question....

How does the LTV work when calculating a remortgage for my friends behalf? He can definitely afford the mortgage on his own but when he puts an application in with a lender do they still look at the LTV for a 'Re'mortgage?? I'm confused how this works?

Appreciate your help in advance.

Thanks,
Skint Dude

opinions4u

Amount of debt / property value

e.g.

£120k owed v £150k value = 80%.
£150k owed v £120k value = 125%.

beecher

Remember that your lender would have to be happy that the mortgage is affordable, so salary multiples would have to stack up.

skintdude

we actually are in negative equity by about 8k.

so are lenders willing to lend more LTV on 'RE'mortgages as you are already in the property?

_Andy_

As you're in negative equity then only option will be the current lender (subject to income etc)

skintdude

ahh... the current lender is northern rock. not looking good then?

_Andy_

It depends whether they approve it or not.
To give us some idea, what's his gross annual salary and how much is owing on the mortgage?

skintdude

He gets about £24-£25k per year with over time.
He has no credit cards or other loans.

We owe about £116k on a 2 bed flat.

What do you think?

opinions4u

You are asking a lender, already exposed to the risk of losing money to negative equity, to reduce their security further by releasing you from your commitment and allowing the remaining borrower to owe around 5 times their salary.

They would be mad to agree to it.

I predict that the impact of the credit crunch is going to delay your plans.

beecher

opinions4u wrote: »

They would be mad to agree to it.

As would the OP's friend. £116k over 22 years at 6% is nearly £800 which is more than half his salary, with overtime.

Is it an option to sell up? - presumably you have a deposit saved for your new place - paying £4k each to get rid of the negative equity would seem to be a good idea.