New deal/Remortgage

swanslegend

Hi

I was wondering if anyone had advice regarding new deal/remortgage.

Here are the facts:

We purchased a property in 2011 for £105k at LTV of 90% (10% deposit) with Nationwide. We had a two year fixed rate at 4.49%. This is due to expire in December 2013. Therefore £94k mortgage.

The property we purchased was valued by two separate estate agents at £135-140k in 2011 (I know the values can be exaggerated with estate agents). We had a very good deal on this property as the vendors wanted a really quick sale. Properties in my area similar to mine are valued at around £140k but as we live in such a small area there aren't many property sales in order to compare the selling price.

We have done a small renovation ie new kitchen, new bathroom, changed layout, new floors, new ceilings etc and spend around £15k.

My question is as the property was valued by Nationwide at purchase price of £105k in 2011, now that I believe the property to be valued at least £135k-140k (which it was valued by estate agents before the work was done), will I need to "remortgage" to a different mortgage provider to obtain a better LTV or will my current provider acknowledge the increase in the property valuation when switching deals? Ideally I would like an LTV of below 70% to get the great deals on offer. Is this achievable?

I'm new to mortgages so not 100% sure on this.

All advice appreciated.

Cheers

leccyblue

Hi,

If you explain your circumstances to your lender - i.e. you purchased below market value and you have also renovated - they should let you switch to a new product with a lower LTV. This isn't a remortgage as you would be staying with your existing lender. You may need to pay for a new valuation survey.

swanslegend

leccyblue wrote: »

Hi,

If you explain your circumstances to your lender - i.e. you purchased below market value and you have also renovated - they should let you switch to a new product with a lower LTV. This isn't a remortgage as you would be staying with your existing lender. You may need to pay for a new valuation survey.

But as they valued the property in 2011 for £105k (purchase price), will they increase the value to £135k-140k or realistically will I need to go to a new lender?

Who would I need to pay for a new valuation? Would I need to go through the lender? Would they be reluctant to increase the valuation to what I believe it to be as there has not been many sales of properties in my area over the past 2 years and bearing in mind they valued it at £105k in 2011?

Cheers

kingstreet

A lender will probably use an indexed valuation for a customer retention product. This may not get you the better loan to value you believe now applies.

You may be offered the chance to pay for a valuation by a Nationwide surveyor which would hopefully confirm your value and the LTV.

Finally, if you remortgage elsewhere, the lender will also instruct a surveyor to inspect the property to value it.

leccyblue

swanslegend wrote: »

But as they valued the property in 2011 for £105k (purchase price), will they increase the value to £135k-140k or realistically will I need to go to a new lender?

Who would I need to pay for a new valuation? Would I need to go through the lender? Would they be reluctant to increase the valuation to what I believe it to be as there has not been many sales of properties in my area over the past 2 years and bearing in mind they valued it at £105k in 2011?

Cheers

You can only ask! They may have 'valued' it at £105k in 2011, but this is because that was the purchase price - and you've already said that the property was sold to you below market value. A lender won't value a property above the purchase price unless it is a discounted/concessionary purchase.

The best thing to do is to speak to them and explain you bought it below market value and have now rennovated it and they should (hopefully) allow you to pay for a valuation through them to find the current value. It might not come out as high as you expect and get you the LTV you want at which point you'd have to then decide whether or not to approach a different lender for a remortgage product.

We're going through a similar process at the moment with First Direct. We are purchasing a property below market value (at £125k, value £160k-£170k) and are taking a mortgage of £105k. We are going in on a tracker mortgage with no tie-in (our LTV at 84%), and they have told us that once the mortgage is in place and the sale completed, as long as we pay for a second valuation survey, we can then immediately borrow against the full value of the property, where we hope to get on to a 65% LTV mortgage by switching product - but failing that a 75% LTV.

There are lenders that would have let us borrow against the full value of the property from the outset but rates not quite as competitive and we require the unlimited overpayments option which only First Direct appear to offer.

Foxy-Stoat_3

Whats your new rate now as how does it compare to other rates at the current LTV and reduced LTV?

May be wasting your time and money if the rates are the same....unless you intend on releasing the equity.

Or go to a new lender and base the current value on similar properties and assuming you haven't over-egg'd it you should be fine.

swanslegend

Thanks for all your posts.

My current rate at 90% LTV is 4.49% where as if my property was valued at £135k which I honestly believe it should be then the interest rate would be around 2.44% with LTV of lower than 70%. We don't intent on releasing any equity and in the perfect world we would like to stay with our lender as we have had a really good experience with them.

How much are valuations? Around £500 I would imagine?

leccyblue

swanslegend wrote: »

Thanks for all your posts.

My current rate at 90% LTV is 4.49% where as if my property was valued at £135k which I honestly believe it should be then the interest rate would be around 2.44% with LTV of lower than 70%. We don't intent on releasing any equity and in the perfect world we would like to stay with our lender as we have had a really good experience with them.

How much are valuations? Around £500 I would imagine?

£180 for a property between £100k and £150k

http://www.nationwide.co.uk/mortgages/usefulinformation/mortgagefeescharges/feesandcharges.htm

It's only the mortgage valuation you require, not homebuyers report.

This is of course if they allow you to do this. Only they can answer that. I'm just giving you the benefit of my experience in that First Direct are certainly allowing us to do it. As long as you can justify your reasons (BMV purchase, renovation) and are prepared to pay the valuation I can't see why not?

Foxy-Stoat_3

Take the internet rates with a pinch of salt as you may well get offered a higher rate once a formal application is made.

Good luck, seems like you could well reduce your interest and if you overpay to your current monthly mortgage payment you can slice a few years off your term!