Leaving SVR mortgage

Wrexhamed

Hi, my 5 year fixed rate mortgage is ending soon, I have 27 years left to go! :eek:
When it ends I will be saving over £200 per month by going onto SVR. My LTV is currently 86%, so could I go onto SVR for a few months and then switch to a fixed rate deal based on a 85% LTV?

Yorkie1

Yes. When a fixed period comes to an end it automatically goes onto the SVR unless you choose a different product with the same lender (this is called a product transfer) or choose to get a different mortgage with a different lender (this is a remortgage).

Are you clear that your house will actually be valued at what you think it's worth? You're not being overly optimistic about what it would sell for? Have you checked it against recent sale prices for nearby similar properties? I'm asking because the risk is that you spend money on the application for a new product, and the house is valued at lower than you want, so you end up with a higher interest rate than you bargained for and/or wasting your initial money.

Wrexhamed

Many thanks for the reply. If anything, I think that the house will have gone up in value as the 86% LTV is based on the price we paid for the house (which was £8K less than the asking price) and we have done a lot of work to the house, new bathroom, boiler, etc.

Jimbo1976

If you stay with your existing lender (as Yorkie described as a product transfer) then typically your lender will calculate the value of your home based on house price inflation ie original purchase price plus any average regional increase. So its worth ringing your lender and asking them which products you can have. it may be that your lender thinks your property is worth enough to get you an 85% LTV product.

Clearly the lender will not know about the money you have spent on the property.