Advice on "re-mortgaging" with same lender please!

chequer71

Hi all,

We're FTBs who have been trying to get our heads around mortgages for a while now. It's slowly sinking in, but one clear answer I'm struggling to get is on "re-mortgaging" with the same lender.

For example: moving in tomorrow on a 90% LVT, overpaying (or at least saving a huge amount extra to avoid repayment charges) over the next few years, then re-applying for, say, a 80 or 75% LVT and subsequent better rate.

There's the theory, but I'm struggling to find more info about it working in practice.

Is it as straight-forward as it looks? Does the interest vs capital re-payment balance in the initial years of the mortgage, or the potential for house price rises in the intervening years make it tricky to achieve in practice?

Is it still classed as a re-mortgage and does it thereby still incur the associated fees?

Any advice would be hugely appreciated. Basically we're in a decent position to save a fair bit of money over the next 18-36 months, but for several reasons we're reluctant just waiting that long to save up a bigger deposit (planning for kids imminently/current attractiveness of fixed-price mortgages/rental increases in our area - East London) so have been looking at the various low deposit/early switching strategies (shared ownership, interest-to-repayment mortgage switching, 30-year to 25-year switching etc.)

lee111s

When staying with the same lender they tend to work off the value that you paid for the house. When switching you tell the new lender what you think it's worth and they then get a valuation done. If you bought a house at a bargain price or the price does increase over the next few years then yes, you stand to get a better rate as you'll have a better LTV.

Best thing to do is overpay as you're going to and see what the market is like in a few years when your current fix is up. Your current lender may be the best about as you'll have to factor in the costs of switching such as legal fees and new product fees with the new lender.

holly_hobby

Just to make it clear in your mind, a remortgage is when you to switch your mortgage borrowing (whether releasing equity of not) to an alternate lender, which will involve new underwriting and a survey (desktop, driveby or attended).

If you want to merely change the deal with your current lender, its just a rate/product switch for existing borrowers, with no further underwriting if LTV meets requirements, if you also want to release any equity at the same time, its called a Further Advance - and will be subject to underwriting and also subject to survey.

Hope this helps

Holly