FTB Help with Remortgaging

muddyfox470

I don't know whether it is too early to be thinking of remortgaging, but I will make figures a bit easier so i can hopefully get some answers.

I bought a repossessed house (my first house :j) for £95,000 with a 90% LTV 2 Year Fixed Mortgage (4.69%).
I am looking to do about £15-20,000 of repairs and modernisation to the property, which will increase the value inline with neighbouring properties (around £155,000).

Now in 2 years time, with my current mortgage at £85,500, can I remortgage at the current market value, say £150,000, to bring down my LTV. I.e. I still only need the £85,500 mortgage but the house is worth a lot more. LTV would go to around 55/60% which would help me find a better long-term mortgage for the property.

Have I got this all wrong, or how does remortgaging work if the value increases, and I don't need any more capital?

Any help would be much appreciated.

PS. I am going to have a proper read through Martins remortgage guide over the next few weeks.

benjo

You have it about right, if you home increases in value and you dont need to borrow anymore money - then your ltv looks better.

The only things at issue are how much value your improvements put on house in the eyes of a valuer, some improvements dont add as much value as they cost and you are estimating an increase in value of 63% which is pretty impressive,

Also what movements there have been in the housing market in general during the period of time you have owned the property.

Example your improvements increase the value by 10% but the housing market falls by 10% = your house hasnt changed in value.

muddyfox470

I understand the final value may be high as I have stated, but at least its served the purpose of seeing whether I was thinking straight.

So thank you very much for your reply. The house was purchased as a REPO in need of some TLC (and new boiler, central heating and double glazing), but it is very possible that I could double my modernisation/refurb costs.

I will keep an eye out on the markets and invite some valuations when I have finished the work to see what has happened. I don't want to make a quick buck, I just want to help lower my LTV to make repayments cheaper so I don't have the mortgage for as long.

Thanks again

suisidevw

Thanks for posting this. Have been wondering about the same thing.

Bought a house as FTB for £197, 500 as a bit of a reck in June last year and got a 85% LTV so mortgage was £167, 500.

We believe we have added at LEAST £30k of value to the house and if this is the case (who decides it, i.e. if we remortgage with some lender will someone else come and re-value it) our house is 'worth' £230k, and we will need to borrow circa £160k, an LTV of approx 75%........

benjo

suisidevw wrote: »

Thanks for posting this. Have been wondering about the same thing.

Bought a house as FTB for £197, 500 as a bit of a reck in June last year and got a 85% LTV so mortgage was £167, 500.

We believe we have added at LEAST £30k of value to the house and if this is the case (who decides it, i.e. if we remortgage with some lender will someone else come and re-value it) our house is 'worth' £230k, and we will need to borrow circa £160k, an LTV of approx 75%........

I think if you remortgage with your existing lender they often do a desk top valuation, ie they have the original valuation, do some magic calculation that involves general house price changes in the area for similar properties and apply it to your property - so it may not take into account any improvements since they often dont even enter the house.

You may need to pay for a full house buyers survey in this case, just to get them to actually look at your improvements.

suisidevw

Thanks for the info benjo. Hmmmm, will cross that bridge when we come to it, appreciated