A little mortgage advise please - LTV

heartagram20

Hello people of the forum, I haven't been on for a little while.

I was wondering if someone could give me some advise on renewing my mortgage please? (most likely with a different provider, currently Halifax which deal expired in Feb).

I've been using the comparing websites for mortgage deals and I keep getting confused when it asks for the property value. I'm looking to decrease my mortgage years to around 20, after I bought my first home 2.5 years ago at the price of £145,000 and currently I've got £117,560 left.

When I logged onto my Halifax account and click renew a policy with them, it tells me I've got a Loan to value of 70.13% based on 27.5 years left to pay (30 year mortgage which i'm looking to decrease to 20).

I've done the maths of my LTV and it seems my house price is coming out roughly at £167,620. (117560 / 167620 = 0.7013 * 100 = 70.13 %)

Obviously i'm pretty new to mortgages still and i'm unsure if I've totally got this wrong.

Does this mean Halifax is valuing my house at £167,620? I understand I may have to have my house valued if I was to go with a different mortgage provider.

Many thanks,
Chris

kingstreet

Yes. The Halifax indexed valuation is £167,620.

heartagram20

kingstreet wrote: »

Yes. The Halifax indexed valuation is £167,620.

Thank you for clarifying, I'm surprised it's went that high.

Can I also ask, if I'm applying for a new mortgage could I quote that price as the current value? Or would I have to get my house valued?

Thanks once again,
Chris

kingstreet

You can put what you want. The lender's surveyor may or may not agree with you based on best comparables - recent sales of similar property in the vicinity.

heartagram20

kingstreet wrote: »

You can put what you want. The lender's surveyor may or may not agree with you based on best comparables - recent sales of similar property in the vicinity.

Ok I understand - thanks.

Could it work in my favour to renew a deal with Halifax but change the number of years the mortgage runs for if they value the house at that price? Just I'm unsure if another lender would give me 70.13% LTV.

Sorry for being such a novice, I'm trying to grasp the whole process.

Thanks
Chris

kingstreet

If you alter the term, you will have to involve a human being and invoke the advice process. That means affordability calculations and questions about income and outgoings.

If you leave the term alone and overpay voluntarily, assuming you want a shorter not longer term, you achieve the same thing without increasing the contractual monthly payments and going through the post-MMR "advice" wringer...

If you want a longer term, you have no alternative. (I know you don't, but if others reading do...)

heartagram20

kingstreet wrote: »

If you alter the term, you will have to involve a human being and invoke the advice process. That means affordability calculations and questions about income and outgoings.

If you leave the term alone and overpay voluntarily, assuming you want a shorter not longer term, you achieve the same thing without increasing the contractual monthly payments and going through the post-MMR "advice" wringer...

If you want a longer term, you have no alternative. (I know you don't, but if others reading do...)

By increasing the payments and sticking to the longer term deal (27.5 years left), how would this work out in the long run? Would they come a point when I have a zero mortgage but years remaining on the deal?

I appreciate your help answering my questions!

Chris

kingstreet

Let's say the normal monthly payment is £500 and the term is 20 years.

You want to pay the mortgage back earlier. You have two choices.

Ask the lender to reduce the term to 15 years and the contractual monthly payment is £550. You have to pay that, come what may.

Leave the term as it is and pay the £550. £500 + £50 voluntary overpayment. You will still repay the mortgage in 15 years.

The difference is, if you have a particularly heavy month and don't want to pay the extra £50, you don't have to.

Just made up figures BTW.