How soon can I secure a mortgage deal?

kempstar

Hello

We bought a house in September with a 20% deposit, 2 year fix at 3.99%. Not the best deal around, partly because I am self-employed, and also because of the small-ish deposit (we wanted to keep our flat and rent that out).

By the time the two years are up, we are hoping to be able to get a much better deal, due to a combination of several factors-

I will have been self-employed for nearly four years by then, which opens me up to more lenders
We have spent a lot of money doing up the place, which will hopefully reduce the LTV (place was a tip when we bought it)
Additional money available to pay down the mortgage

When can I start looking for a new deal? Do I have to wait until the two years are up, or can I secure the new rate a few months in advance? There are large fees for redeeming the mortgage early, presumably these would still apply if I changed to a new deal with the same lender?

We are just keen to lock in a good long term deal as soon as we possibly can, before house prices drop and reduce our LTV

Thanks in advance

kingstreet

A couple of months before the current deal expires.

When applying ensure you tell the solicitor handling the remortgage that you do not wish to complete until the day, or day after, the early repayment penalty ends.

savit4l8er

Yes you can secure a rate a few months in advance. In some cases an agreement in principle can last for 6 months subject to no change in circumstances such as losing an income, taking on borrowing that affects ability to repay or some change on a credit file that would have affected the decision in the frist place.

kingstreet

savit4l8er wrote: »

In some cases an agreement in principle can last for 6 months subject to no change in circumstances such as losing an income, taking on borrowing that affects ability to repay or some change on a credit file that would have affected the decision in the frist place.

That's the definition of a Mortgage Offer, not an agreement in principle. An AIP doesn't secure an actual deal, it simply indicates the lender is willing to lend to you.

dimbo61

In the current housing market please do not think that putting in a new kitchen or bathroom will add value!
If you want to increase the equity then pay down the mortgage debt
Now 75% LTV should get you a better deal next time ( If interest rates do not go up in the next 18 months!)
If you build a large extension and use your own savings this MAY? add value.
3.99% is not a bad deal with 80%LTV so overpay every month

savit4l8er

kingstreet wrote: »

That's the definition of a Mortgage Offer, not an agreement in principle. An AIP doesn't secure an actual deal, it simply indicates the lender is willing to lend to you.

Not sure that makes any sense. What do you refer to as a mortgage offer in this post.

In any case, you can get an AIP subject to valuation where all supporting documents are assessed, pay a booking fee for your rate if you like and it is there for you when ready. With it being a remortgage it should be pretty straight forward.

GMS

savit4l8er wrote: »

Not sure that makes any sense. What do you refer to as a mortgage offer in this post.

In any case, you can get an AIP subject to valuation where all supporting documents are assessed, pay a booking fee for your rate if you like and it is there for you when ready. With it being a remortgage it should be pretty straight forward.

An AIP assesses no documents. For a mortgage to be agreed subject to valuation there needs underwriting which involves the checking of documents. Assuming all ok and a satisfactory valuation then a formal offer is issued.

Why should a remortgage be straight forward?

kempstar

dimbo61 wrote: »

In the current housing market please do not think that putting in a new kitchen or bathroom will add value!
If you want to increase the equity then pay down the mortgage debt
Now 75% LTV should get you a better deal next time ( If interest rates do not go up in the next 18 months!)
If you build a large extension and use your own savings this MAY? add value.
3.99% is not a bad deal with 80%LTV so overpay every month

We arent talking about popping to B&Q and putting a cheap crappy kitchen in though. We wont see a lot of change from £20k for this kitchen, its stunning.

We bought the house for £500k in september, it was a tip when we bought it. Since then, an almost identical house (the other end of the terrace, on a row of 5 houses) has sold for £550k. The spec of that house was nicer than ours when we bought it, but nowhere near as nice as ours is now. We got a really good deal on our place, which is why we are keen to lock in a good long term rate before either rates rise or prices crash! Both of which are pretty likely.

kempstar

So by the sounds of it, paying the booking fee locks in the rate, and you can only do that a couple of months in advance? I was hoping it would be a longer period that that.

GMS

What is it you are wanting to do? Get a mortgage offer in place for completion in September of this year?

kempstar

what i want to do is lock in a good long term deal at a low rate. i am concerned that by the time Sep 2014 comes around, that rates would have gone up and/or prices will have fallen, both of which will affect the deals available to us.

If we could lock in a rate say 6 months before that, then that would reduce the risk a bit, as we only have to get to Feb 2014, which is 6 months sooner. Make sense?

I