LTV/Mortgage Application/Interest Rate Query

b0rker

[FONT=&quot]Hi,

We want to get down to 75% LTV to go for a 4.99% 5r year fixed. If our house is valued at £98,000 and we have £73,000 left on the mortgage we can do this. We can probably get down to £73,000 left on the mortgage if we pool savings. what we cannot do is know how much a lender will value our house at. Would we need to apply for a mortgage to find out how much a lender will value our house at? If we apply for a mortgage on a 4.99% IR and then don’t go through with it as we cannot afford it this will be marked down against our credit history. Is there a way around this almost seemingly inpossible sitaution?

Thanks in advance.
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opinions4u

As a general guide, Nationwide's calculator is a good tool.

But ultimately you are completely in the hands of your lender's valuer.

One search will not damage your credit history.

b0rker

Thanks for that.

Another quick query please:

I have worked out the following using a LTV calc:

repay monthly @ 4.99 on 73,000 = £403 which is £2,4180 over 60 months

repay monthly @ 5.99 on 79,000 = £485 which is £29,100 over 60 months

So by getting to the 75% LTV we are dropping 1% interest but we are only saving £4920 over the 60 months? That is despite also paying the mortgage down a further £6000 (from £79,000 to £73,000) in the first place to meet the 75% LTV.

Is this correct. Are we making other savings via the 1% interest rate drop or am I wrong?

Many thanks

opinions4u

b0rker wrote: »

Thanks for that.

Another quick query please:

I have worked out the following using a LTV calc:

repay monthly @ 4.99 on 73,000 = £403 which is £2,4180 over 60 months

repay monthly @ 5.99 on 79,000 = £485 which is £29,100 over 60 months

So by getting to the 75% LTV we are dropping 1% interest but we are only saving £4920 over the 60 months? That is despite also paying the mortgage down a further £6000 (from £79,000 to £73,000) in the first place to meet the 75% LTV.

Is this correct. Are we making other savings via the 1% interest rate drop or am I wrong?

Many thanks

Don't forget your debt will also be £6,000 lower (roughly). So that £6k is effectively worth nearly £11k if you deploy it this way. A non-taxpayer sticking it in a savings account at 5% for 5 years would get £7,658 at the end of the term.

b0rker

Thanks,

We would be really breaking our backs to get the extra £6,000 together in a months time so we are trying to work out how advantageous it would be to do so. I can see what you are saying. By paying the £6000 now to get to the 75% LTV will save us £4920 over 5 years. If we had the £6000 in a savings account at 5% we would make only £1,658 over the 5 years.

I am not sure a saving of £4920 is going to be enough to encourage us to put ourselves in a difficult financial position though. The mortgage is between 2 people and essentially is is only a saving of £500 each per year. To get the extra £6000 we would have to sell one of our cars and both go to the limit on our overdrafts and more.

I am not sure that is worth a £500 saving each per year.

RufusA

I'm a little confused in your original posting you talked about pooling savings to find the £6k. IMHO this is worth it as it's going to pay considerably more than the interest you'd gain on the savings. Particularly if you can rebuild part of the savings in the short / medium term with the reduced interest.

In a later post you mention selling the car and maxing your overdrafts. In this scenario it's not worth it, as the debt in the short term is likely to cost more than the mortgage saving and puts you at financial risk.

All IMHO, only you know the real scenarios and the cost / risk you are taking.

One other factor is that you may expend a chunk of money on mortgage arrangement fees, maxing debt, selling cars only to discover the mortgage company undervalues your property by £1k and you are ineligible. Then you could risk losing your upfront fees etc for nothing!

HTH - Rufus.

b0rker

RufusA wrote: »

I'm a little confused in your original posting you talked about pooling savings to find the £6k. IMHO this is worth it as it's going to pay considerably more than the interest you'd gain on the savings. Particularly if you can rebuild part of the savings in the short / medium term with the reduced interest.
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Sorry should have made it clearer in the original post that it would take so much effort to get the £6000 together.

RufusA wrote: »

In a later post you mention selling the car and maxing your overdrafts. In this scenario it's not worth it, as the debt in the short term is likely to cost more than the mortgage saving and puts you at financial risk.
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Yes we would have to sell one of our cars, use some money we have for other bills, max our overdrafts and use some other money floating about. We bought in 2007 o a 100% mortgage and are already using £20,000 we have saved in that time to pay the mortgage down to £80,000. The other £1000 we have paid down over the last 2 years. So the £6000 would need to come from somewhere that we had not planned for. We could wait and save on the SVR but I am not confident that house prices will not go down over winter again so would then be looking at more negative equity and even possibly a worse LTV.

RufusA wrote: »

All IMHO, only you know the real scenarios and the cost / risk you are taking.
.

Yes I would say it may seem like a very good idea to find the money from somewhere to save £5000 over 5 years (that is not peanuts to us by any means) but it could leave us open to some serious problems if one of us loses a job or something BIG needs to be paid for ASAP.

RufusA wrote: »

One other factor is that you may expend a chunk of money on mortgage arrangement fees, maxing debt, selling cars only to discover the mortgage company undervalues your property by £1k and you are ineligible. Then you could risk losing your upfront fees etc for nothing!
HTH - Rufus.

Yes I had considered this. I am pretty certain we will bite the bullet and see the losses as being spread out over the 5 years as acceptable. It is not very MSE but then neither is forcing ourselves into financial turmoil to find £6000. And £6,000 is optimistic. We did a scenario where the house was valued at £4,000 less (entirely possible of course) which would mean we would need to find £10,000.

RufusA

b0rker wrote: »

It is not very MSE...

I don't think Martin would ever advocate taking on substantial unsecured debt to save a bit of money.

So going for the lower risk route IMHO is very MSE!

Good luck with whichever route you choose, if it helps I am sure you could find the £500 / year saving elsewhere with a little minor economy and a review of your other bills / providers.

Rufus.