Remortgage - LTV v''s Hikes

alibhoy

I'm just browsing through posts looking for info (all very useful!). I find the fixed rate length interesting. I'll be remortgaging for the first time in September, at about 89% LTV. With the expected interest rate rises I could fix longer term , however I also need to factor in that my payment schedule would indicate I'll hit 80% LTV within 2 years resulting in a 'better' rate (better at the time - not necessity better than now).

I realise it's guess work, but any idea how to make an educated guess at interest rate rises vs interest rate reduction due to reduced LTV?!

I.e. do I fix for say 5 years with 90% LTV or do I fix for 2 and remortgage at 80% LTV at that point.

Property value £140,000.

Thanks in advance!

GoingOn30

Could you overpay between now and September and get down to 85% LTV? Many lenders have better rates at 85 than 90.
As for the length of fix it depends on what happens with brexit, wider economy etc. but you could look at lenders that offer 3 year fixed as you might get better rates again at 75% LTV.
You're in the most expensive part of lying your mortgage off at the moment so you want to pay it down as quickly as you reasonably can until you get into a better LTV bracket.

getmore4less

You can quantify the LTV side by looking at current rates.

problem is that if you use 5% increments different lender have different sweet spots for the big drop.

once you have those numbers eg 90%->80% is say 0.5% then you have to make the call will rates go up by more than that over the 2 years.

You also have the extra complication that £140k going down is right in the no fee/fee window.

On top of that you also have HPI which could go either way and change the LTV.


if you can hit 85% by sept that may make the choice easier and if you are with a lender with competitive retentions you could look at borrowing to hit the LTV,
Long term 0% purchase cards can be good for this if you have the cashflow.

alibhoy

Thanks for the replies, really helpful.

I don't think we can reduce to 85% LTV before September without losing our emergency fund (around 7k).

I'll have a look at the 2 and 3 year fixed and do the sums. We should be able to save a fair amount during that time so hopefully pay a little more off at the end of that fix.

Thanks again!

Thrugelmir

There's always the risk that property prices could dip at some point in the future. Direction of travel isn't necessarily a linear line upwards. A factor that should always be considered. Better to make judgements on what you know rather than guess the future.

Novice_investor101

I bought at 75% LTV 5 years ago & fixed at 2.99% for the 5 years. At first I was annoyed as rates went down & I was stuck at 2.99% But my house value has also increased to £130k from £100k, so my LTV is now below 50%. So the rates I can access now are the cheapest available. Swings & roundabouts.

I'm now looking to fix again for another 5 years. It doesn't seem worth getting a mortgage with a fee for a slightly lower monthly DD. I worked out that over 5 years the cost of the fee wouldn't be paid back by the lower DD.

So I figured I'll go for the no fee option & use the fee money to overpay instead.

dimbo61

Overpay what you can afford every month.
Find out what the property valuation is when you come to remortgage or pick a new deal with your current lender.
If your £7,000 emergency fund will help you get 85 percent LTV then consider that and build up your emergency fund again.
Rates are still very good and a mortgage is a 15/20/25 year marathon not a 2/3 year sprint.
A 5year fix might get you too 75 percent in 5 years time.