worried about remortgage time/neg equity!!

bikingbarney

hi all im after some advice/guidance!

just to set the scene...

we bought our first house in November 2007 for 128000

we had a mortgage from Halifax for 122000 , they then added the arrangement fee and then a higher lending charge to it t take the mortgage to 124384.

i have just phoned halifax last week and they have told me that our house is now valued at £109000.

i was quite shocked at this as we have spent nearly 15000 on renovating it from the bottom up (new kitchen and double glazing etc)

two houses on the estate similar to mine but not as nice (mid terraced as opposed to end like ours ) have just sold for £130 and £135 respectively .

we are due to renew our mortgage in the next month or so and im worried that we are not going to get a good deal.

we are currently on a 2 year fixed rate at 6.79% interest only.

i would like to switch to a repayment mortgage now to start bringing it down , this is the first time we have re mortgaged so not sure how it really happens.

for instance if halifax only value our house at 109 can we mention the other 2 that have sold for more??

many thanks

steve

maninthestreet

If you switch to their SVR, you'll only be paying 3.5%, which is 3.29% less than your current deal.

beecher

The problem is that even if your house was valued at £135,000 your LTV would still be too high to remortgage elsewhere or to get a good deal as it'd be over 90%. Realistically what do you think it'd be worth? £15000 worth of renovations is not going to add £15000 to the value, especially once you've factored in the fact that you bought at the peak.

Did Halifax say they could offer you a deal? Have a look at their existing deals

http://www.halifax.co.uk/mortgages/halifaxmortgagecustomer.asp

They have been offering deals to existing customers in negative equity, and if they offer you one from the 75-95% range then you would find it is probably more competitive than you'd get elsewhere. Otherwise you could ask them if you can get someone to come out and value it - it'll cost you though so make sure you're confident that it is worth as much as you think it is.

bikingbarney

if i drop onto the svr can i still change from interest only to repayment??

or is this classed as re mortgaging and then i will have to pay the fee to set it up??

Berkshiregirl

What you can do (assuming your Halifax mortgage is set up like mine) is leave it on interest only so you're only committed to the smaller amount every month, and then make overpayments (I'm allowed up to 10% overpamyents without fee). This wold bring down the capital owed and reduce the interest you're paying over the life of the mortgage, but wouldn't mean you're stuck paying a higher repayment mortgage if anything were to happen.

Not advice, but a suggestion that would work short-term while riding out the SVR.

Trollfever

From the owners of Halifax:

The bank expects a “gradual return” to economic growth in the next 18 months, adding that any rebound will be “modest.” House prices are likely to decline by about 7 percent this year before increasing 2 percent in 2010, the bank said.

SandC

bikingbarney wrote: »

if i drop onto the svr can i still change from interest only to repayment??

or is this classed as re mortgaging and then i will have to pay the fee to set it up??

I changed from interest only to repayment last year and there was no charge, this was at the time I set up a new tracker rate. Going to SVR does not require remortgaging either.