Confused about LTV if remortgaging

propertydog

I'm a bit confused about remortgaging.


I got a mortgage in 2015 for £220k with £80k deposit - 74% LTV. Property has now gone up from £300k to £380k in value.


I'm coming to the end of my fixed interest rate period.


1. How is the LTV calculated if I want to remortgage?


2. Do I need to add more money to my deposit to remortgage if the value has gone up on the property overall? Or does remortgaging free up money that goes towards any increase in the deposit to keep the LTV the same?


Thanks. Bit confused about LTV and remortgages.

Thrugelmir

When you say to intend to remortgage. Do you intend staying with your existing lender or moving to a new one.

AnotherJoe

propertydog wrote: »

1. How is the LTV calculated if I want to remortgage?

Usually by a crude ratio of how much they have gone up in your area. Sometimes you can request a personalised valuation, depends on the lender. I think in most cases a new (different) lender will do a more personalised valuation, e.g. pay someone to check.

2. Do I need to add more money to my deposit to remortgage if the value has gone up on the property overall? Or does remortgaging free up money that goes towards any increase in the deposit to keep the LTV the same?
Neither. You'll "reborrow" whatever is your current redemption value, e.g. A bit less than 220k against the new higher value, so the loan to value will go down which improves your chances of getting a lower rate.


Thanks. Bit confused about LTV and remortgages.

To summarise, your new mortage will be the same size as your current one you don't put more money in, you have made £80k on paper, and that is yours, so now you'll be borrowing 220 (minus whatever you paid off that) against a 380 house, around 58% LTV.

da_rule

You will only be remortgaging the money you currently owe (unless you opt to ask for more). In terms of LTV you will have the house value minus the outstanding mortgage balance. What ever is left is yours.


For ease of maths lets say in the 1-2 years you've had the mortgage you've paid off £10k (just a figure, not intended to be accurate). You would be therefore be looking to remortgage £210k on a property worth £380k. You would therefore have a LTV of about 55%.


You don't have to pay any more as a deposit. There may be fee's, such as valuation costs etc. And you could take the opportunity to pay some extra off if that suits your circumstances.