Remortgaging and House Value

jamminca69

Hi all

Currently looking at remortgaging our house in September as the redemption penalties drop to under 1% as enter our final year of a 5 year fixed.

Currently we have a mortgage of 152k and are paying 5.4% which roughly works out around £916 a month. Rather than waiting until end of Sept 2011 when we would have zero penalties we are looking at moving this Sept. Initially looking we can save quite a bit even taking into account the redemption penalites but also wanted to know can you pay off redemption penalties with savings rather than having it added to new mortgage provider? as would rather clear the £1400 than add it to the mortgage.

The other issue is the LTV, we bought our house in Sept 06 for 185k, in Feb 2010 we had local estate agents round and got a wide range of values from 190k-210k (sale prices not asking prices) we didnt put it on the market in the end for various reasons but thought the values were about right. The lower end valuers mentioned how if you put it up for 215k and even if you got 205k or 210k then the deal may fall through as mortgage lenders will only see it as around 190-195k.

We asked the higher valuers about this who of course disagreed but we are a bit worried that if a general house pricing figure is used the prices have technically gone down according to that - Nationwide quote house now worth 175k! Other ones I have done inc Zoopla, Rightmove etc have ridiculous values of 220k-240k! Difference is quite large in that on a 200k valuation we would only need to pay £2,500 to make it a 75% LTV whereas if 190k valuation we would need £12,500.

Are mortgage lenders still slightly flexible? when we bought the house the value came back at 180k but they said they will stretch to the 185k. So feel same issue will come about and affect our LTV.

This also means i dont want to pay fees for a mortgage and then find they wont provide it for our house value - is it best to look at mortgages with low up front costs and lower valuation fees so that we dont lose too much incase that does happen? Is there any way of getting a value upfront before starting the process?

Thanks

Thrugelmir

I would use the £1,400 ERC to pay down the mortgage immediately. By redeeming the current mortgage you will incur both the ERC and a new product fee. Far more cost effective to overpay the mortgage until the fixed term ends.