How does remortgage process work?

harshitguptaiitr

I am thinking well ahead of myself.

I am completing within a week as FTB with a 2.49% mortgage on 90% LTV on a 2-year fixed.

Two years from now, I will probably be looking for remortgage and hence wanted to know is there anything I need to do or understand so as to get good mortgage rates (subject to market conditions at that time)

I know that overpayment (if possible) is something I should do if and when I have some spare cash.

What about LTV at the time of remortgage?
How is valuation calculated?
Do I make an estimate and apply on that basis and then bank conduct its valuation survey (paid by me)?

Sorry, I am confused and thinking probably 1.5 years ahead of me.

harshitguptaiitr

I am currently with Nationwide and my fixed deal will end on 30th September.

I bought house at 90% LTV and if I make mandatory payments from now till September, my outstanding loan will be 73% of original purchase price. Although I will be making some overpayments during this period.

Nationwide last updated data for Q4-2018 on their website (https://www.nationwide.co.uk/about/house-price-index/house-price-calculator) and as per that, my house has gone up 1.44% in value.

I am doing first time remortgage, so I have many questions and will appreciate your help:

1. Where do I get valuation of house before I see best available deals for my LTV band?

2. Should I use my current outstanding loan or projected loan (at September) for calculating LTV and thus finding best deals?

3. When will I get a renewal / retention offer from Nationwide?

4. Is retention offer from Nationwide same as remortgage for new customers porting from other lenders? Or do 'new' customers get better deals as compared to existing customers? I am aware of £500 cash-back for new customers v/s £100 for retentions, but my question is for interest rate.

5. When should I start looking for best deals? What is the maximum period for which lenders can 'freeze' the interest rate they have offered?

[Deleted User]

3. When will I get a renewal / retention offer from Nationwide?

You won't - you will end up on the Standard Variable Rate (SVR) at the end of the fixed term, which is a higher rate and they have no incentive to push you off it. It is up to you to find a new product to move onto whether that is with the existing lender (probably won't require affordability checks) or with someone else (essentially a full application same as you did the first time around).

2. Should I use my current outstanding loan or projected loan (at September) for calculating LTV and thus finding best deals?

If you remortgage with another lender before the end of the fixed period, you will almost certainly be liable for an Early Repayment Charge (ERC) on the Nationwide mortgage. This means if you are going to look at the rest of the market, expect to move AFTER the end of your fixed period to avoid this.

If you stay on a Nationwide product they may not charge this, or often you can 'book' a product to move onto at the end of the fixed deal.

1. Where do I get valuation of house before I see best available deals for my LTV band?

Be conservative - assume the value exactly as you paid for it and you are unlikely to be disappointed. If you move to another lender they will do a valuation (at your expense) and you don't want to risk it coming lower than your assumed value or you could end up in a different band.

5. When should I start looking for best deals? What is the maximum period for which lenders can 'freeze' the interest rate they have offered?

A mortgage offer (which is what you will have if you look outside your existing lender) is usually valid for 6 months, and you will often have paid a fee to reserve a rate for that time. Bear in mind that if you haven't reserved a rate it may not exist when you come to move the money and lenders can change their offerings at any time.

I'm not an expert though, and there are quite a few brokers and advisers around the board that could give you a more educated answer.

d0nkeyk0ng

harshitguptaiitr wrote: »

I am currently with Nationwide and my fixed deal will end on 30th September.
1. Where do I get valuation of house before I see best available deals for my LTV band?

I used Nationwide's calculator on their website. I think it's based off the purchase price and then adjusts for inflation. Even then, when I went through the deal-switch with nationwide, my house valuation was higher than what it had originally estimated.

harshitguptaiitr wrote: »

2. Should I use my current outstanding loan or projected loan (at September) for calculating LTV and thus finding best deals?

Use what the outstanding amount will be when your deal ends, because that's what you'll be remortgaging.

harshitguptaiitr wrote: »

3. When will I get a renewal / retention offer from Nationwide?

I got both an email and a letter about three months before my deal was to end.

harshitguptaiitr wrote: »

4. Is retention offer from Nationwide same as remortgage for new customers porting from other lenders? Or do 'new' customers get better deals as compared to existing customers? I am aware of £500 cash-back for new customers v/s £100 for retentions, but my question is for interest rate.

I did some quotes online. A new customer will get a better deal than an existing customer but the increase in valuation put my LTV lower than I expected.

harshitguptaiitr wrote: »

5. When should I start looking for best deals? What is the maximum period for which lenders can 'freeze' the interest rate they have offered?

Towards the end of your deal. Remember, if you went for a remortgage with a different lender, it can take 2 months for it to process through. You don't want to have to pay SVR because you didn't switch earlier.

Deleted_User wrote: »

You won't - you will end up on the Standard Variable Rate (SVR) at the end of the fixed term, which is a higher rate and they have no incentive to push you off it.

I've had two deal switches with Nationwide, and each time they told me three months before the deal expired that my deal was coming to an end, they gave me my mortgage rates for SVR, and offered some deal switches.[/QUOTE]

Deleted_User wrote: »

If you stay on a Nationwide product they may not charge this, or often you can 'book' a product to move onto at the end of the fixed deal.

As per terms on Nationwide's website, you won't pay an ERC if you switch to another Nationwide product.

[Deleted User]

I've had two deal switches with Nationwide, and each time they told me three months before the deal expired that my deal was coming to an end, they gave me my mortgage rates for SVR, and offered some deal switches.

That's nice to hear, and good on them for doing it - unusually helpful when compared to my experience!

gatters

I don't think Nationwide are offering £100 for retentions anymore.