Lowering mortgage repayments

absolute0

I once heard of someone taking a mortgage out, updating the property some 6-12 months later and then re-valuing the property in order to get a better repayment rate.

Does anyone know how this works?

QBSBuck

I don't know the example you are referring to but I would imagine they improved the house, increasing value such that the LTV decreased below % threshold (e.g. 75% or 60%). Upon remortgage the larger valuation house value vs the mortgage allowed access to a better interest rate.

absolute0

So you would only be able to do this if you re-mortgaged?

Sorry, I'm new to Mortgages.

kingstreet

Take a penalty-free product when you first buy, something like a lifetime tracker, or offset product, if you have cash lying around.

Once the work has been done, apply for a remortgage. Most lenders offer fee-free products so it should cost you nothing to change.

jgh

That's what we did. We bought our place in 1992 for 40K with a 90% loan. In about 2002 property inflation would have made it worth 80K, but the repairs and improvements made it worth 120K, so our loan was then about 30% so we were able to get a cheaper mortgage.

QBSBuck

Property inflation, pah. That probably made this a more likely prospect in years gone by.
But now any improvements (which themselves cost money) will be less likely to affect the LTV deal advantage.