LTV - Remortgage

Peco141

I do not see this question asked much on the forum and I wondered why.

Am I correct in saying that the larger the LTV the lower the interest rate and in turn the monthly payments and if so why do more people not talk about it and talk about getting their house revalued before taking out a remortgage?

Mine if due in March 2017 and I plan on getting a mortgage valuation done in January 2017.

Surely, more often that not, the mortgage offer from an existing lender will be based on the initial valuation not taking into account work done on the property or house price increases?

millkins

If you owe £80k on a £100k property, your LTV would be 80%. If you owe £90k on a £100k property, your LTV would be 90%. The higher the LTV (and, from the lender's point of view, the higher the risk will be), the lower the interest rate (as a rule).

My advice would be to speak to a mortgage advisor as each lender is likely to do their own valuation (I've known some to visit the property for an internal inspection whilst most seem happy with an external one. My first remortgage was done electronically with the lender never having seen the property!).

Good luck with your remortgage!

Dan-1987

Interesting thread and hope you don't mind the hijack,

I'm in a similar position as I'm about to remortgage,I've done a lot of work to the inside of the property since I bought it so I'm convinced it's obviously worth slightly more than it was,but everything I've heard seems to point to the fact they'll just value it externally/online and not in person unless I pay for that,is this correct?

Nothing has been for sale/sold on the street since I bought this,also zoopla etc seem to have it as the same price as I paid for it,even slightly less so I'm concerned I'm going to get a poor LTV and as such end up paying another poor rate for a bit longer?

Peco141

It's a tricky one Dan. I bought my property for £115,000 4 years ago. There's a house along the street exact same size and shape with same number of rooms bedrooms etc which has just been put on the market for offers over £130,000. However the house for sale does not have a garage or a driveway as mine does. We've also recently installed a new bathroom and new steps and railings to the front of the house and our kitchen is a lot nicer.

I'm therefore utterly convinced that my property will be worth more and am therefore happy to pay £60 for an independent valuation with a reputable valuer such as DM Hall before taking out a new remortgage.

If any potential new lender does not agree with potential new valuation I'm happy to move to a lender who does.

getmore4less

lower LTV == lower rates.

existing lenders tend to just use an index to get the current value
for many that is good enough to get the better rate without paying for a valuation

Yulia

Peco141 wrote: »

I do not see this question asked much on the forum and I wondered why.

Am I correct in saying that the larger the LTV the lower the interest rate and in turn the monthly payments and if so why do more people not talk about it and talk about getting their house revalued before taking out a remortgage?

Higher the LTV high the interest rate and so ur payment. For eg:
Current value of ur home: 100k
Remaining debt: 80k
LTV WILL BE 80%
Let's say ur home valued at high about 110k, than LTV will be 73%, so you will get lower interest rate deal than above.[/QUOTE]

Mine if due in March 2017 and I plan on getting a mortgage valuation done in January 2017.

Surely, more often that not, the mortgage offer from an existing lender will be based on the initial valuation not taking into account work done on the property or house price increases?[/QUOTE]

Some big lenders do valuation by sending valuator at home.

AnotherJoe

Peco141 wrote: »

Am I correct in saying that the larger the LTV the lower the interest rate and in turn the monthly payments and if so why do more people not talk about it and talk about getting their house revalued before taking out a remortgage?

Surely, more often that not, the mortgage offer from an existing lender will be based on the initial valuation not taking into account work done on the property or house price increases?

I believe the lender applies an uplift ( or downgrade) based on data about house price movements in the area since the mortage was taken out. There was a rant here very recently from someone who had his house actually valued instead of taking the generic uplift and as a result he was a fraction out on the next LTV level and missed out on a better rate.

Dan-1987

^ that's exactly my issue,but the opposite way round
I'm on a crappy rate (only put 5% down) and I really could do with getting a good valuation come remortgage time to enable me to move into the 90% or less ltv bracket and therefore access better rates.
I'm convinced if I had it valued in person itd be favourable so looks like that's probably my best option

I've logged into my natwest mortgage account,and it says the initial offer is indeed based on the purchase price 2 years ago and as such is 93% ltv right now,the rate offered is slightly less than now but is still very poor compared to what's out there

Peco141

AnotherJoe wrote: »

I believe the lender applies an uplift ( or downgrade) based on data about house price movements in the area since the mortage was taken out. There was a rant here very recently from someone who had his house actually valued instead of taking the generic uplift and as a result he was a fraction out on the next LTV level and missed out on a better rate.

I've been in the house nearly 4 years and normally take a 2 year fixed.

After the first two years ended there was no valuation from my current lender. I stayed with them because the rate the offered was reasonably good however the LTV would have been based on the house value two years prior.

Makes me wonder why more people don't talk about this or is it something people don't realise?

Either way I will 100% be getting a valuation done in January and keeping a close eye on what that house down the road sells for.

Kynthia

If the revaluation isn't likely to give you a better LTV banding, and therefore better interest rate, compared to the value to lender is happy to use (either your purchase price or a change based on local indexation) then what is the point paying for a valuation? For example if the lenders remote value gives you an 85% LTV but you believe an on - site valuation would result in an 82% LTV then there's no benefit. It's only if you expect the valuation to bring you down to the next LTV level that you'd bother if it's a choice.

kingstreet

Normal process in each case;-

Customer retention product from existing lender - "indexed" valuation based on original purchase price with regional fluctuation taken into account via Nationwide or Halifax house price indices or possible automated valuation by HomeTrack

option of drive-by or internal inspection may be available at cost to borrower

Remortgage - lender will usually require drive-by or internal inspection by surveyor and will usually pick up the cost and offer free legals. Indexed/Automated valuation may be used for very low LTV cases.