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Does house value increase affect mortgage payment?
Danny30
Posts: 499 Forumite
Hi I have a question for my step dad who bought a house back in the 80's, the value of the house was around £130,000 it's now valued at £470,000. He's paying back a £70,000 mortgage on the property with Halifax, they have the house value down as £310,000 and not £470,00. If he corrects the house value would them does this affect how much he has to pay back?!
Many thanks!
Many thanks!
0
Comments
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Hi I have a question for my step dad who bought a house back in the 80's, the value of the house was around £130,000 it's now valued at £470,000. He's paying back a £70,000 mortgage on the property with Halifax, they have the house value down as £310,000 and not £470,00. If he corrects the house value would them does this affect how much he has to pay back?!
Many thanks!
The current valuation has nothing to do with what he has to pay back on the mortgage. He pays back £70,000 plus interest.
Do they have the valuation because they are insuring it? If so, the insurance value is for re-building and doesn't include the cost of the plot. However, he may be paying over the odds for buildings insurance and you can check whether it would be cheaper elsewhere.
Was it an interest-only mortgage or linked to an endowment policy? If either of these are the case, can he pay off the £70,000 (if interest-only) or make up the difference (if the endowment policy is not expected to be enough)?0 -
Halifax have an automatic value set and adjusted for each property they mortgage.
That value can affect the rates available if the borrower is switching products - but it will not cause an issue in this case.I am a Mortgage Broker
You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0 -
Hi Danny30 now you do not give your step dads age but I guess he must be near retirement age if he bought a house in the 80,s
Has he got a repayment mortgage? or an endowment that will pay it off ?
Your step dad can remortgage to find a cheap interest rate UNLESS he wants an Interest Only mortgage which maybe more difficult due to age ( paying when retired)0 -
Yes he is 55 and working full time so paying back the 70k, he has a repayment mortgage to paid back over the next 12 years. We were wondering whether the value of the house would mean he can pay less than the 70k but guessing it doesn't work like that!0
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No he still owes £70K but he maybe able to get a cheaper deal by remortgaging with his current lender or moving.
Can he afford to overpay ? Every month!
You pay back the amount you borrowed and INTEREST now the sooner he clears the mortgage the less interest he pays!
We reduced our mortgage term from 22 years down to 10 and saved over £50,000 in interest0 -
He could sell and buy somewhere cheaper that would reduce his payments to £00
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