Value of home for re-mortgage purposes

TediousPhoenix

A little background information - we bought our flat at the height of the housing market in 2008 and took out a 25 year, 5 year fixed mortgage. The fix rate ends in six months so my husband and I are looking at our options.

Our original plan when we bought was to sell after five years, but for various reasons I think we are going to stay, so I'm looking to get a new mortgage deal.

I'm using various mortgage calculators but I honestly don't know what to use for the value of our flat, and whether my best guess would be accepted by a mortgage company.

We paid 205k for our one bedroom flat. But it was the largest on the development. The 'standard' size ones went for 170k. The two bedroom flats went for 220k (ours has the same square footage area as the two bedroom flats, but at the time we couldn't afford the extra).

Obviously, given the housing market situation it's not worth 205k any more. Our neighbour completed his sale last week and got 155k. Would it be fair to say his dropped nearly 10% so ours has too? Or would a mortgage company say a one bedroom flat in the same area is a one bedroom flat, yours is worth the same? There isn't a flat on the market I can compare it too. All I know is that the one beedroom flat above ours has the same square footage and is rented out for £850/month, the other one bedroom flats go for £100 less.

Obviously, in order for me to do my research I want to know the ltv. In 6 month's time the remaining mortgage will be 152k and we will put another 20-30k-ish on top of that.

withabix

TediousPhoenix wrote: »

I'm using various mortgage calculators but I honestly don't know what to use for the value of our flat, and whether my best guess would be accepted by a mortgage company.

They will arrange a Valuation, which you will be charged for.

No lender will accept your opinion of the value.

What SVR will your mortgage revert to and what is your current fixed rate?

jonesMUFCforever

If you are saying that in 6 months you will have £132k mortgage outstanding on a property worth say £170k you should be ok with most mortgage lenders.

TediousPhoenix

Oh, I understand I will need to pay for a valuation, but if I apply for a 70% ltv mortgage and pay for a valuation and they turn round and say it's worth 20k less then I've wasted my money on that lender's valuation for an unsuitable mortgage, which is what I don't want to do.

I don't know what the SVR will be once the deal ends, but I ideally want another fixed deal so will want to move. The current rate is 5.63%.

A point that deviates away from the topic is that I'm also thinking that we could aim to pay the mortgage off in 5-7 years as I earn a lot more than I did 5 years ago. We currently pay 1050 per month, but would like to pay 2200-2400 per month. So that needs to be factored into the mortgage we chose in terms of capital repayments and mortgage length. But as I said... we have 6 months to make our mind up, I'm just beginning the research.

Thunderbird_2

Hi

I can imagine the dilemma. All I can suggest is get two or three state agent around to give an idea because you are "considering" to sell. And see what they come up with.

When I had valuation done by the mortgage lender last week, the surveyor was only interested In the square footage of the place and how many bedrooms, toilets and bathroom it had. Not much the state of the house.

I would not suggest making your one bedroom into two bedroom flat an option nor adding ensuite to boost the value. I would certainly get estate agent opinion first and consider options later.

All the best

withabix

TediousPhoenix wrote: »

Oh, I understand I will need to pay for a valuation, but if I apply for a 70% ltv mortgage and pay for a valuation and they turn round and say it's worth 20k less then I've wasted my money on that lender's valuation for an unsuitable mortgage, which is what I don't want to do.

I don't know what the SVR will be once the deal ends, but I ideally want another fixed deal so will want to move. The current rate is 5.63%.

A point that deviates away from the topic is that I'm also thinking that we could aim to pay the mortgage off in 5-7 years as I earn a lot more than I did 5 years ago. We currently pay 1050 per month, but would like to pay 2200-2400 per month. So that needs to be factored into the mortgage we chose in terms of capital repayments and mortgage length. But as I said... we have 6 months to make our mind up, I'm just beginning the research.

Ask a local Estate Agent to do you a valuation.

On a fix of 5.63%, you are likely to be on a SVR of potentially a lot less. Who is your lender?

If you are with LTSB/C&G for example, the age of your Fixed Rate would put you on 2.5% SVR at the moment.

Your proposed level of overpayment may break the rules of any Fixed Rate deal, so you may be better on a SVR for one or two reasons.

TediousPhoenix

It was an Abbey mortgage which is now Santander.

I know what you mean about overpayments. A lot only allow 500 per month overpayments and only allow a percentage of the loan over a year. I was thinking about reducing the length of the mortgage to get around this, but if one of us were to lose our jobs... well, it couldn't happen... so we'd need the right insurance (not sure what it would be or how much it would cost). You may be right about going for a SVR in that case.

jonesMUFCforever

A lot of lenders have deals without fees nowadays.
So you won't have to pay for a valuation.

dimbo61

You could also consider an offset mortgage as you can make large overpayments or build up savings in the offset account.
You should keep a normal term when you apply and then once the mortgage is up and running ask for the term to be reduced ( this cost me £50 with my lender) and I can therefore extend the term back to it,s original term for £50