Mortgage term has ended and I dont have 85% LTV

Bighandmo

Apologies for this - I have am a novice to all of this...but I need help! In 2004 my wife and I purchased our first house. It was a new build 3 bedroom (3rd v small) semi detached property and was ideal for our then little family. It was £137,500 and my wife and I had saved for 10 years whilst renting in our pre marriage years to save a £25,000 deposit. I was then a new teacher earning £19,000 and my wife is full time carer to our disabled child. We took a mortgage with Alliance and Leicester (now santander)for £112,000.

We took a five year fixed rate at £650 p/m which expired last month. We have now moved to Santanders svr and our mortgage has gone down to £605 p/m. I think we have about £108,000 outstanding. We have 24 years 11 months remaining. We are both 35.

Last year we had our house valued by 3 local estate agents. We are rapidly outgrowing our house with our children and looked at moving to a bigger house. The valuers were markedly different - 1 was £115,000 - the top one was £133,000 with a view to getting between 128,00 and 130,000. They said we had bought at the wrong time and had probably lost about 7% year on year (as had everyone else)!!

We can't afford to move to a bigger house as we dont have enough equity in the pot to give us a deposit. As the mortgage adviser told us - if you sold your house this morning, you wouldnt have enough money to buy it back this afternoon - you would need about another £10,000. Realistically, if you sold and paid the solicitors fee's etc you would only have between 7 and 13,000 disposable income from the sale of the property - NOT ENOUGH FOR A DEPOSIT FOR A BIGGER HOUSE.

I therefore wanted to deck the garden and jazz up the bathroom and make do with the situation. Obviously our family income has risen in the past 5 years, but no-one seems interested in that. I phoned Santander and explained I wanted to borrow approx £3000 to do the garden and bathroom. She at first said it wouldnt be a problem - we were loyal customers, she could see how much our mortgage was etc and asked for a valuation. I told her between 125,000 and 130,000 based on estimates we had been given. She said the minimum they could give us was £5000 - at 4.99% (BUT YOU COULD PAY IT BACK WHEN YOU WANTED IF YOU DIDNT NEED IT ALL). The extra to our mortgage would be £23.87 a month over the duration - affordable as it is less than what we have been paying for the last 5 years.
She then went on the computer and said we had been unsuccessful. She said she couldnt share the value of our house with us, but that we just fell short. She could only lend us £4300 based on the information she had, and as they only lend a minimum of £5,000 - she could not help us. She said we just fell short of the 85% LTV. Doing a quick finger in the wind guesstimate, I think that means the value of our house is about £123,000??
What can we do? Is there anyone out there who will lend us £5,000 and can we switch our mortgage over. We dont have a 'pot' to dip into at present. We will be in a much better position in about 12 months time when we have cleared a cc bill - we are currently paying that off at £500 p/m in order to clear it in 10 months. Thereofore we will potentially have an extra £500 in a year from now. Never deferred any payments, no loans, no ccj's - But everytime I think I have found an avenue the small print says maximum 85% LTV.
We need about 87-88 .

The_J

Pay off a lump sum of £700 from your mortgage.

Reapply for the the £5000.

You can try to remortgage elsewhere as well. Time to speak to a broker.

Dave_Ham

Do remember that Santander's Index Valuation is not based necessarily on your home, it is based upon trending and sales of homes in your post code or nearby ones.

Therefore, it will all be dependent upon an independent valuation.

What is a bigger motivator though, raising funds to do up your home (potentially for sale) or just to be able to obtain new homes.

I would counter argue to the Estate Agents (remember back end commission on sale so set different expectations) that if you can sell near market value - sell privately for a few £ saving then the only cost would be your solicitors which can be done for £1,000 maximum.

Sell up, save like crazy in the meantime and then bank it all and go back out to the marketplace for a 90% or 95% mortgage, which you sound as if your credit is ok.

Obviously, this may not be the most appropriate solution for you; I do not have full facts just please do not take the "advice" of an Estate Agent or Estate Agent "Tied Mortgage Advisor" to be absolute fact.

I wish you well....

Bluemeanie_2

Tolerate your bathroom and decking, clear your CC bill with your £500, then save up the £500 a month to pay for your improvements. Then overpay the £500 off the mortgage to move you into a better position.

Lifes_Grand_Plan

Can I just clarify some points as i'm a little confused....

You took your mortgage in 2004 yet still have almost 25 years remeining on it? Was it a 32 year mortgage?

Also the mortgage was originally 112,000 and 7 years later is still 108,000.... is that right? Perhaps its because I overpay my mortgage but I feel as though you should have paid more than £4,000 off in 7 years...?

Just wanted to make sure I understood and that you hadn't mixed your figures up.

Bighandmo

paying off 700 wont clear anything will it? it is short across the duration of the mortgage meaning we dont meet the 85%. Also, are there lenders who will give us 2-5k onto our existing mortgage?
As for the postcode thing, I mentioned this last night. Our road is an old terraced road - with 2 big new houses (5 years old now) at one end - ours and next door were the same purchase price 5 years ago - the rest of the street ranges from 85,000 to £100,000.
Santander can only go on the valuation price that is on their computer - and she said it is coming up under 130,000 but couldnt give me the exact figure.
WE DONT WANT TO MOVE - HAVE JUST PUT NEW CARPETS DOWN, REDECORATED - WE ARE GOING TO RY AND GET A BIT OF A POT GOING OVER THE NEXT FEW YEARS SO WE HAVE A LUM SUM - Forgot to say we have a 3rd addition 3 years ago, so now want to make do with our home for the next few years - and we thought decking would add value - it is a perfect starter/retirement home - for someone - lol!!

DannyboyMidlands

Forget about the garden and bathroom. The house was brand new 8 years ago so can't be that bad.

Concentrate on paying off your debts rather than scheming to take on new ones.

Bighandmo

You took your mortgage in 2004 yet still have almost 25 years remeining on it? Was it a 32 year mortgage?

Also the mortgage was originally 112,000 and 7 years later is still 108,000.... is that right? Perhaps its because I overpay my mortgage but I feel as though you should have paid more than £4,000 off in 7 years...?

Just wanted to make sure I understood and that you hadn't mixed your figures up.

APOLOGIES - IT WAS 2007 - DOH!!! 30 YEAR MORTGAGE! I'm sure that its about £108,000 - I have paid £633 a month every month for 5 years. Starting price was £112,500

Dave_Ham

Ok - so I misread your initial post when you said you wanted a bigger property and that the mortgage advisor gave you some information that this was not feasible - apologies for trying to give a solution.

On a side note - DOES ME PUTTING SOME PARTS IN CAPITALS MAKE YOU READ THIS BIT MORE TIMES OR IN MORE DETAIL?

The_J

Just get the extra 5k unsecured, credit card or loan.

spadoosh

Lifes_Grand_Plan wrote: »

Can I just clarify some points as i'm a little confused....

You took your mortgage in 2004 yet still have almost 25 years remeining on it? Was it a 32 year mortgage?

Also the mortgage was originally 112,000 and 7 years later is still 108,000.... is that right? Perhaps its because I overpay my mortgage but I feel as though you should have paid more than £4,000 off in 7 years...?

Just wanted to make sure I understood and that you hadn't mixed your figures up.

They borrowed £112000, that isnt what they will pay back its more likely to be double that.

The majority of your mortgage in the early stages is interest repayments with very little actually paying off the capital looking at their numbers it looks more or less right. Its heartbreaking looking at your mortgage going down by £30-50 when your paying £500+ a month but thats just how it rolls.

Maybe you see more of an impact because your mortgage is over 7 years old, much smaller capital borrowed and or better rates. Everyones needs and financial product are different whats right for you might not be right for the OP. Thats why theres sooo many different mortgages available.