Confused - Mortgage Question

matt1987

Hi All

Hope somebody is able to clear this up for me....

Basically I have always wondered what happens when your mortgage deal runs out (so I am on a 2 year fixed currently) and you want to change lender..... is this classed as remortgaging?

I know this may seem really stupid to some people, but I have never had to do this before as my first house we sold the month our mortgage deal ran out.

Secondly, if it is classed as remortgaging, we live in an area whereby the last year property prices have risen by about 8%. Now we paid £220k for ours, however only a few doors down there have been recent sales of around £230k for smaller properties with less land. Would the lender take this into account and send a valuer round? Or will they just go by what we paid for the property?

I am trying to get it down to 85% ltv you see and we'll literally be a few grand off.

Thanks for reading!

Matt

Wh05apk

Yes it would be a remortgage, and the lender would either use a desktop valuation which would index prices, or more likely as you are a high LTV they would instruct a physical valuation , either "drive by" or a full internal.

kingstreet

You will roll onto the "follow-on" rate in your original KFI/mortgage offer when your current deal ends. It's normally the lender's standard variable rate.

You can ask your current lender for a new deal, a customer retention product; or you can remortgage. This involves a new mortgage from a new lender which a solicitor uses to repay the old one.

On the retention product, lenders tend to use "indexed" valuations, based on the original price, multiplied by the increase in house prices in your area.

If you go the remortgage route, you put an estimated value on the application and the lender's surveyor inspects the property and decides if it's realistic. If it is, it will be used, if not, he will put a different value on and the accepted value will be the basis for the loan to value.

matt1987

Brilliant advice, thanks guys.... These retention deals, are they normally fairly competitive?

kingstreet

You would need to see what is offered at the time and compare it to the alternatives, factoring-in any fees and costs so your comparison is fair.

Fairly competetive? Who knows? Sixty-four thousand dollar question and surely dependent on lender and moment in time they are compared.

Wh05apk

Depending on the lender, they tend to be better than SVR, but not as good as they would offer new customers or what you could get elsewhere, best thing is to see what your lender will offer, then speak to a broker to see if they can beat it, currently there is a price war breaking out so rates are very low generally.

nobodysdriving

I am 'confused'

say I bought a house for 250,000 in 2010
the loan I took out was for 200,000 on a fixed rate of 3% for 4 years...reverting to 6% at the end of the 4 years...

say now I am coming to the end of the 4 years and I have paid off so far 4000 of the original mortgage, so £196,000 outstanding....

I thought that in this case if I remortgage all I have to do is to seek a mortgage for 196,000?? as that is the amount outstanding to be paid?

the valuation was going to be just for the new mortgage lender to be 'satisfied' the property is worth at least that amount (not less), and is in good order etc, if the property is worth more than it is still 196,000 that I would borrow right?

the problem is if the property is worth less one would have to make up the shortfall with cash...

amnblog

You 'need' to borrow a maximum of the current outstanding amount with the new lender - yes.


You bought with 20% deposit.


If the property is now worth £261,500 you can apply for a 75% loan to value product (your original product was 80% loan to value).