LTV or LTPP for Remortgage

Graeme_D

Hello all,


First post here.


Last summer I purchased my first flat here in Glasgow at a price of £119,000, The home report had the flat valuation at £130,000. The flat was listed as offers over £110,000 and I was informed by my solicitor (who coincidentally worked for the firm that was also acting as selling agents for the flat) that the seller had been let down last minute by a potential purchaser and was keen for a quick sale, hence the lower than normal listed price (It was common to find valuation less 5% for offers over prices at the time for pretty much all flats in the area). So at the end I was successful with my offer of £119000.


My mortgage LTV(pp) was calculated on the purchase price of £119000. Deposit of £6000 borrowing £113000 at LTV(pp) of 95%. I used the mortgage guarantee element of the help to buy scheme. I understood that it was common in this situation for the lender to use the lower of the purchase price/valuation.


Now thinking ahead to next year when my 2 year fixed product will come to an end. I will have paid around £5000 of capital leaving the debt at circa £108000. I am obviously keen to remortgage with a better product rate and looking towards an 80% LTV product. Now this is on the assumption that my flat valuation remains at £130000 and that it is this valuation that my new LTV is calculated against not my original purchase price? I will have £4000 of savings to remortgage a debt of £104000 against value of £130000.


Goin on the assumption that market conditions result in the valuation remaining at £130000 is my assumption around my new LTV calculation correct?


Thanks in advance.
Graeme

MortgageMamma

The loan to value is the amount you are borrowing as a percentage of the current property value. You shouldn't assume what the valuation is at the time, there are some electronic valuations that can be done online to give you a clearer idea - once you have done that or done some sort of research at the time, then you can realistically estimate what loan to value product category you will fall in.


Hope that helps


MM

Graeme_D

Thank you MM.


My question was more on the principal I guess i.e. will my purchase price of £119000 have a potentially negative bearing on future valuation?


Doesn't seem right if the internal order of the property has improved and market conditions have remained static.


Graeme

MortgageMamma

I don't think it will, the market value is affected by collective purchase prices not one, so your one individual purchase price will not directly affect your market value to a great extent, unless there are not many sales within say 1/2 mile of your home.

Graeme_D

Thanks, collective sale prices makes more sense.


Graeme