Remortgage question

mumbles87

Evening everyone

Just a quick question about remortgages if anyone has a moment to explain them to me.

we are currently 2 years into a fixed 4 year deal on our first mortage.. (got a 4 year fix from nationwide as a deal for banking with them.. same rate as 3 year) anyways been thinking a lot about remortgaging

when do I start the process and looking at deals? is it about 6 months to go or sooner?

Can I add to the mortgage at remortgages? for example boring more for an extension?

also my home value has gone up a lot since buying.. it was 300k when we bought its around 421k according to zoopla now.. does that come into account when remortgaging? i.e a much higher LTV?

any tips and advise will be appreciated just so I'm fully prepared.. I don't want to come towards the end and be like ahh I don't know what to do.

kingstreet

Are you remortgaging, or are you asking your existing lender for a customer retention product and a further advance, if you want to borrow more?

You should be comparing the two.

Three months before your current rate expires is about usual. Lenders use indexed valuations to establish loan to value, so establish what this is at the time, then compare it to what similar properties in the vicinity have sold for in the previous few months.

Going the remortgage route, that's a new mortgage with a new lender to repay the old one and raise the extra money you need, if you want to, will mean new affordability and status checks where a simple customer retention option with your existing lender (no extra borrowing) is often done with no further checks.

However, the remortgage route will probably get you a free valuation inspection by a surveyor if you are unhappy with your current lender's indexed valuation.

When closer, get your existing lender options, direct-to-lender only options and speak to an independent broker so you have a full picture before you decide.

mumbles87

kingstreet wrote: »

Are you remortgaging, or are you asking your existing lender for a customer retention product and a further advance, if you want to borrow more?

You should be comparing the two.

Three months before your current rate expires is about usual. Lenders use indexed valuations to establish loan to value, so establish what this is at the time, then compare it to what similar properties in the vicinity have sold for in the previous few months.

Going the remortgage route, that's a new mortgage with a new lender to repay the old one and raise the extra money you need, if you want to, will mean new affordability and status checks where a simple customer retention option with your existing lender (no extra borrowing) is often done with no further checks.

However, the remortgage route will probably get you a free valuation inspection by a surveyor if you are unhappy with your current lender's indexed valuation.

When closer, get your existing lender options, direct-to-lender only options and speak to an independent broker so you have a full picture before you decide.

thanks for the tip on comparing both I was planning to try and do it all at remortgage, borrow more at the same time as clearing the mortgage.. Shouldn't be an issue for affordability as the LTV has changed that much that with borrowing more and lowering the mortgage by a year meant the payments went up by only £150 a month

if I remortgage (not borrow more) with my lender will they accept the increased value rather than what it was taken out on?

kingstreet

mumbles87 wrote: »

if I remortgage (not borrow more) with my lender will they accept the increased value rather than what it was taken out on?

As I said, in that case you aren't remortgaging.

You are asking your existing lender what customer retention products it has.

If you ask your lender to borrow more, it's a further advance.

You usually find your existing lender uses an indexed valuation, as I mentioned.

A remortgage means you will cancel your old mortgage (deed tying your current homeloan to your property) by taking out a new homeloan with a new lender (which will have a new deed/security tying your property to your new homeloan).

mumbles87

What would be the best option remortgage (maybe retain like you said) and look to borrow more in a year or so's time after or link it in at the same time like you just said?

I wasnt sure with borrowing more if they could release the funds directly to me because I want a loft conversion plus upgrade the boiler and few other bits so its going to be a sizeable advance

kingstreet

Are you asking if you should get a customer retention product now and apply for a further advance later, or are you asking about remortgaging now and raising funds you won;t need for some time?

Whether you look for a further advance, a secured loan from a third party or a remortgage where you borrow the increased funds and pay off your old mortgage as well, you are going to need proper plans and estimates for any work you plan to carry out.

The lenders will work to the current value of the property, not what it will be worth afterwards, so you need to ensure you have sufficient equity now to cover what you need to borrow and not to exceed perhaps 85% of the current value.

Whichever option you choose, you will need to meet lender criteria, status and affordability requirements.

mumbles87

Are you asking if you should get a customer retention product now and apply for a further advance later, or are you asking about remortgaging now and raising funds you won;t need for some time?

Whether you look for a further advance, a secured loan from a third party or a remortgage where you borrow the increased funds and pay off your old mortgage as well, you are going to need proper plans and estimates for any work you plan to carry out.

The lenders will work to the current value of the property, not what it will be worth afterwards, so you need to ensure you have sufficient equity now to cover what you need to borrow and not to exceed perhaps 85% of the current value.

Whichever option you choose, you will need to meet lender criteria, status and affordability requirements.

Thanks for that tip, I will make sure when we apply for the advance that I have plans in place with estimates for the work.

As for the value I had done all my sums off its current value but thats very hard to gauge from websites alone. zoopla has it as 420k this other website that the name escapes me gave me 3 prices, 1 if the market is slow (315k) one if the market is normal (350k) and 1 if its a strong market (420k) So I then did all the sums off the middle price and still came up within 83 LTV I believe it was with the increased borrowing that I was looking at. Similar house sold a few months ago for 382k so if I work to the middle one of 350k I think would be better. Luckily got 2 years before the deal ends so hopefully a bit more of a rise from the value to reduce the LTV further.

One thing last night showed me is I will defiantly be going via a broker this time. Last time as a first time buyer it was pretty simple and my bank happened to be offering the best deal around. I had time on my hands to work through paper work and stuff. This time id much rather pay an expert to work on my side and help me get the best deal.