Yet another remortgage advice request

Stephen_Webber

Hi,

I'm in the situation where my current 2 year fixed mortgage period is coming to an end. I originally bought the house for £136K (2 bed semi in Bristol) and my last statement said I owed around £127k. I took the mortgage out over 34 years (so have 32 years remaining - I was earning a lot less then too). Since then I have had a nice salary increase, taking me up to around £38k and have around £7.5k in credit card debts (on a life of balance card @ 4.95%) and owe around £7k on a car loan (over 5 years). My current mortgage is with Bristol and West and was at 5.09%.

I'm now looking to remortgage, but would like to reduce the terms of the mortgage down somewhat (under 25 years would be good) but to also take out an extra £5k to have my bathroom done.

Am I likely to have any problems doing this, given that I have reasonable debts that I didn't have last time? Is it worth going back to Bristol and West and asking what they can do or should I shop around? I'm toying with the idea of going for a discount rate or tracker this time, since although it looks as though the rates will go up slightly, I'm hopeful they will not increase significantly. However, the security of a fixed rate does have it's advantages.

First Active have some reasonable rates (4.85% over 2 years) but I've never heard of them! The next best I have found are Standard Life, at 5.1% (5.3% over 5 years).

Does anybody have any thoughts?

Thanks,
Stephen

MortgageMamma

Yes, my thoughts are, speak to a whole of market broker. Bristol and west are good for some things but if you are stretching your affordability you would be better to look elsewhere. To calculate your affordability your broker would need your current salary plus any other income, the monthly amount of the debt you have, how long for and the total balance of debts. Also to be taken into consideration is your personal and employment circumstances, your lifestyle and your future objectives regarding money/mortgage/property. First active are an excellent lender but may not be the right one for you.

MM

herbiesjp

Agree with MM

Also what is the current value of your property?

Stephen_Webber

herbiesjp wrote:

Agree with MM

Also what is the current value of your property?

That I don't know. I've seen similar houses going round here for up to around £150k, but I think that would be optimistic. I guestimated around £145 now, based on roughly 5% increase over the last 2 years.

In terms of stretching my affordability, I can now afford this house on a standard 25 year, 3.5x mortgage, which I couldn't have said when I first bought it (I was earning about £10k a year less). My debts are around £140 a month for the car loan (over 5 years). This leaves me with around £950 a month to live off and pay towards the credit card. I reckoned remortgaging would probably knock that down to around £800 a month, so I shouldn't be struggling.

Will I need to provide as much documentation for a remortgage as I did when I first took it out (e.g. bank statements, etc)?

Thanks for your help so far.

Stephen

herbiesjp

So you are looking to re-mortgage at £132k (127k+ extra £5k) against a property value of £145k

That would mean a 91% loan to value - so be careful when choosing your re-mortgage deal, as most lenders will charge a Higher Lending Charge. There are some lenders that do not but the rates are just slightly higher. You will need to do the number crunching to see which sort of deals would be better for you.

Also, in terms of interest rates, there are low deals and then there are slightly higher deals that will offer incentives like free legal fees and free valuations - again number crunching needed here to ascertain which would be best for you.

As for documentation, you will pretty much need the same documentation for a re-mortgage.

Your first port of call should be B&W, but i think you will find better rates for your needs with other lenders

MortgageMamma

i agree with herbie I cannot see anyting in B & W's current product range that is competitive enough for you. A higher lending charge needs to be avoided at all costs and free legals and a free valuation would also be a good idea if you can get them. Abroker should be able to draw up a comparison of the most competitive lenders for your requirements, and number crunch and then recommend the cheapest and most suitable mortgage for your needs and objectives.

Stephen_Webber

Thanks for the advice guys. I should point out that the figure of £145k I am using is a best guess, although short of getting an estate agent in, I'm not sure how I would get a more accurate figure. By the time the mortgage valuation is done, it would be a little late. I also think that £5k is probably more than I would need to get the bathroom redone, since I'm only talking getting a new suite fitted, shower installed and tiles in the splashback area and possibly on the floor. Since it's not a big room, I don't think it should be too pricey. My parents had theirs done for £6K, but it was done to a high standard and had a new radiator installed, tiled throughout, etc. My tastes are a little more moderate . Hopefully I won't need to go over the 90% mark. Incidentally, does that 90% include any fees added to the mortgage?

Thanks again,
Stephen

herbiesjp

Stephen_Webber wrote:

Thanks for the advice guys. I should point out that the figure of £145k I am using is a best guess, although short of getting an estate agent in, I'm not sure how I would get a more accurate figure. By the time the mortgage valuation is done, it would be a little late. I also think that £5k is probably more than I would need to get the bathroom redone, since I'm only talking getting a new suite fitted, shower installed and tiles in the splashback area and possibly on the floor. Since it's not a big room, I don't think it should be too pricey. My parents had theirs done for £6K, but it was done to a high standard and had a new radiator installed, tiled throughout, etc. My tastes are a little more moderate . Hopefully I won't need to go over the 90% mark. Incidentally, does that 90% include any fees added to the mortgage?

Thanks again,
Stephen

Get about 3 agents to value the property for you, and tell them you need to sell the property quickly - this way they will tend to give you a price that should be close to what they have sold other similar properties for you and then take an average. This should help you see if you are close on the valuation figures.

You could even have a look at this site: http://www.nethouseprices.com/index.php?con=sold_prices and see if there is anything that has been sold in your road recently



YOu could opt for a free valuation deal, so that if the figures do not add up, then you simply do not have to proceed and have spent nothing in the process.

You can add other fees, over the 90% borrowing, without incurring the Higher Lending Charge


HTH

Stephen_Webber

Thanks for your help. I saw the mortgage advisor I used last time and have sorted myself out with a 5 year fixed mortgage through RBS at 4.99%, which is about the same rate I was finding on the internet while doing my own research. I've also extended it by £5000 to pay for the bathroom. The mortgage advisor estimated the value of my house to be around £155k, based on the advice from the estate agents she works with, so the new mortgage should be well clear of the 95% value of the property (nearer 85%, I think). Fees were about £400, which seems fair too, compared to some of the fees charged. I've also reduced the duration down from 32 years to 25, which seems much more palatable!

Thanks again,
Stephen

herbiesjp

Please make sure that they get all the paperwork in to RBS by Wednesday - the rate was pulled on Friday, but as long as they get the paperwork at the processing centre by close of business on Wednesday you should be ok

Although they should know that

HTH

Stephen_Webber

herbiesjp wrote:

Please make sure that they get all the paperwork in to RBS by Wednesday - the rate was pulled on Friday, but as long as they get the paperwork at the processing centre by close of business on Wednesday you should be ok

Although they should know that

HTH

:eek: I'll give them a call on Monday. I can't imagine they will sit on it, since they will want to earn their commission ASAP. Any reason why the rate was pulled, or was I lucky and it's just that they are putting rates up? My impression is that interest rates are going to remain constant for a while (I was tempted by a discount mortgage) but I didn't feel confident enough about that over 5 years!

Thanks,
Stephen