85%LTV (depending on valuation)

staffiecat

Hi there,
I have just come to the end of a 3yr fixed rate with A&L. I had my house valued this week between £162,000 and £165,000 - my outstanding balance is approx £137,000 therefore just about have 15% deposit. Unfortunately A&L are using halifax index and suggest I only have about 2% deposit ! Because of this best rate they could give me is 2.5yr fixed at 5.99%.

I have searched around and found a good rate with CO-OP - 2 yr fixed a 4.49% with £800 fee (which i would pay directly).

My concern is that if i go with CO-OP and they accept me but they disagree with my valuation i am worried that i will have another mortgage request against my credit history but CO-OP would drop me if I do not have a minimum of 85%LTV.

Please help as I am worried about adversely affecting my credit.
thanks.

beecher2

Who gave you the valuation of £162 - 165,000? If it was an estate agent I'd take it with a pinch of salt. What rate would you go onto with A&L if you did nothing?

staffiecat

Yes, valuation was from estate agents. If I stay with A&L I could go onto their variable rate of 4.99% (but that makes me nervous) or they would give me a fixed rate of 5.99% for 2.5yrs (with no fees).

brit1234

Wouldn't trust the estate agent valuation at all. The lender has an interest in having a correction valuation to protect themselves, so I would go with them on fixed. I possible get a 5 year fix for when rates go up.

staffiecat

Thanks for the advice. I spoke to the CO-OP about this I.e to say that I was nervous about the valuation and they hinted that it would be ok but I guess they are just trying to sell a product. It's a shame but guess i'm better off staying with a&l for the time being.

staffiecat

Out of interest - A&L are about to become Santander. I wonder whether it's worth my while staying on their variable rate until they switch as Santander offer more competitive rates for existing customers.

Does anyone think this would be a good idea ?

payless

First check your original offer - a lot of A&L deals had a follow on rate that was a tracker rather than SVR

staffiecat

They sent a letter confirming SVR. I feel like I am stuck given their low valuation.
Thanks for all the advice

Thrugelmir

If you can afford to. Commence overpaying your mortgage to improve your LTV. Whilst interest rates are low its worth paying down the capital balance as quickly as you can.

madeupname1

I think that Thrugemirs advice is good. Remember, your new fixed rate, if you had managed to secure it, would cost more than the SVR that you are currently being offered. The money you are currently saving in interest from not moving to the fixed rate can be used to pay down your principal so that, even if interest rates were to rise, you would be paying interest on a smaller loan.

staffiecat

Do you think that i should stay on the SVR for a short time then, overpay the capital and then look for a better fixed rate. My main concern is that rates are going to rise but how soon.... !

Thanks to all again for the help