Remortgaging - Can I Reduce LTV before transferring providers?

NathRSW

My current Loan to Value is about 83% and my current Fixed rate deals end in October 2012.

There seems to be quite a few attractive rates for 80% LTV such as the HSBC lifetime tracker @ 3.29% but at my current LTV i can only access 85% LTV mortgages with the next best equivent lifetime tracker rate being 4.19%.

This means a difference in monthly payments of £68 a month and for me to get to 80% LTV i would only need to pay off about £3k to get to 80%.

If it's possible it seems a good idea to try and access a 80% LTV Mortgage.

My question is my current provider (Abbey/Santander) only offers 10% overpayments which isnt of any help for this matter, as I have never re-mortaged before what I want to know is;

Will HSBC or any other bank for that matter let me pay off £3k before the mortgage formally transfers over to them?

Hard to explain, but all i want to do is pay a further 3k off my mortage to try and reduce my LTV before re-mortaging

Thanks in Advance
Nath

harvey115

I think you are missing he point with remortgage.

When you are re-mortgaging you can add money from your pocket as well as the equity in your house. You should consider it as a full new mortgage if moving lender because the new lender will pay at whichever LTV you need to cover the remaining mortgage with your current lender to be paid off. SO you are free to add funds from your savings to pay off your current lender when moving the mortgage.

All this needs to be detailed to the solicitor so that they can make the arrangements to pay off your current lender.

Hope this helps.

Wh05apk

yes, you can either pay direct to the solictor to reduce the balance.

Your LTV of 83% seems very precise, be aware that when the lenders valuer values your property, they could easily knock it down by 5-10% for that reason, I would tend to remortgage with a provider who doesn't have any upfront fees, and offers a free valuation.

NathRSW

Thanks Both

I purchased my house 3 years ago so used that value as the property value. if i use Zoopla it says my house price has dropped by about 5% so maybee my assumption is incorrect.

Would like to think that the price I paid for it was undervalued anyway as it was off a family friend so they accepted a low offer.

harvey115

When re-mortgaging from a new lender they would normally re-value the house. The valuation maybe of different type as you have secured a mortgage just three years ago. The new valuation maybe just be a drive by one or just a computerised one, it all depends on the lender and how they would proceed.

The LTV will vary depending on the value the lender would end up selecting.

dimbo61

You can overpay upto 10% of your mortgage while on your current fix ?
How much do you owe ?
what interest rate are you getting on your savings ?
What interest rate are you paying on the mortgage?
It may well be worthwhile to pay some off now !!

NathRSW

Price Paid £132,500 in Oct 2009, its a 4 bed semi and was on the market for £145,000, I snapped it up as soon as it went on the market.

I owe 109k which makes the LTV 82.26% (based on purchase price)

Cant remember my current rate but it its 5.5%+, it depresses me everytime i look at it so tend to forget it

Couldnt get a good deal last time as to get the house i wanted i had to keep my old house (meaning 2 mortgages), Luckily i sold it within a couple of months

Dont have much savings so just in a regular savings account with first direct.

if my current deal ends mid October, when should i start the process of changing?

Current payment is £676 and that was based on a 30 year repayment period, using the HSBC tracker rate of 3.29% it would bring payment down to around £520 and thats with reducing the repayment period back down to 25 (2 year reduction)

The good news for me is that regardless of the LTV I should be able make saving of circa £100 a month and with 2nd baby of its way it will be greatly appricated.

Thanks All

oldestgnome

I have just done exactly what you are hoping to do!

I remortgaged from Santander to First Direct. I also wanted the lower interest rate which was available if I managed to reduce my LTV by a few percent.

HSBC and FD both did desktop valuations of my property (over the phone during a conversation about what produsts were available). I then agreed how much I wanted to borrow from FD for my remortgage so they could send out the application form etc and agree completion date for after my last mortgage product ran out. (which at the time was 4 months away)

I contacted Santander to find out what fees would be added on completion (£225 admin fee plus X number of days interest between my last payment and the date of the completion) plus how much of my mortgage direct debits for the 4 months was actually capital repayment - then overpayed about 3K over the next 4 months (by cheque) as I was allowed to overpay by upto 10% as well.

FD applied to Santander for the exact redemption figure 7 days before completion and contacted to let me know the difference (which was a couple of hundred pounds) I paid this by debit card over the phone however could have paid this with a cheque or by fast payment.

HTH!

Thrugelmir

NathRSW wrote: »

Cant remember my current rate but it its 5.5%+, it depresses me everytime i look at it so tend to forget it

Worth overpaying by as much as you can every month.

HSBC target a very specific type of customer in the main. So don't build your hopes too high.

dimbo61

Unless you have a savings account paying over 5.5% TAX FREE ! please give me there name? I would overpay any spare money each and every month until october

harvey115

dimbo61 wrote: »

Unless you have a savings account paying over 5.5% TAX FREE ! please give me there name? I would overpay any spare money each and every month until october

First Direct regular savings account gives 8% gross, so 6.4%.