Remortgaging - Advice please

Adelante

My current fixed rate mortgage is coming to an end early next year (March) so beginning to plan ahead.

This will be the first time I've had to consider remortgaging - we bought our property over 4 years ago at the peak of the market and took out a 5 year fixed rate (5.54%). The LTV at the time was 95%.

I'm just looking for some guidance on the best way to approach this and some informed opinions as its all new to me apart from the bits and pieces of research I've done today.

I've done a quick calc to work out my loan balance at the end of my 5 year fixed rate. I've used Zoopla to get a rough value for my property - anyone know how accurate/reliable Zoopla is?

It gave a range for the value which is about a 2.9-12.5% reduction in value for my property. With its actual estimate based on more details I gave as a 7.76% reduction.

So if I use the 7.76% reduction in my property value then my LTV when my current deal expires is just under 95%.

My current deal would revert back to my lenders (RBS) standard variable rate which I believe at the minute is 4%. As opposed to my fixed rate of 5.54%. That in itself would be a fare saving every month for us.

Having an initial look, with an LTV of 95% the best remortgage deal I've seen is a 3 year fixed rate at 3.99% reverting to a standard rate of 5%.

What would people's opinions be on the best options for us? Bearing in mind that at the moment I don't really have any money to reduce the LTV or pay large remortgaging fees.

I'm considering staying put with my current lender (hopefully the standard variable rate of my lender is the same and hasn't increased in 7 months time). I'd then either bank the cash I save every month or overpay to reduce my mortgage to help my LTV when I finally consider potentially remortgaging.

Any advice appreciated.

Thrugelmir

Adelante wrote: »

overpay to reduce my mortgage to help my LTV when I finally consider potentially remortgaging.

My personal view is that this is the best option. Overpaying the mortgage can make significant inroads in the amount you owe. In doing so you also reduce the impact of any future rate rises and also improve your ability to remortgage in the future.

Jimbo1976

Sites like Zoopla and Rightmove are useful but it depends what figures you are using. You need to use sold figures not figures of properties currently on the market.

Whilst I don't want to dash your hopes I think you are cutting it a bit fine to remortgage at your loan to value. There is quite a high risk that despite your research the surveyor your new lender would instruct will give a value below the one you are expecting. it only needs a very small downvaluation of 1-2% and your loan to value goes above 95% and no new lender will look at your remortgage. Recent house price indices show a downward trend and there is not much reason to expect this to change in the short term.

Have a word with your existing lender to see what rates it will offer you. Typically it will use an index to value your property which will give you an instant result. You will probably have to wait until you are 3-6 months away from the end of your rate to do this.

Overpaying is a great thing to do and will help you increase your equity over time.