Remortgage Question

millwalll

Hi All,

I am looking for some advice regarding a remortgage. My current Mortgage expires in January and the rate jumps up a lot.

I got a letter from my current bank telling me that If I sign into my account they have some exclusive rates for me. I have done this but the rates they offer are the same for everyone so not very exclusive.

The rates they offer are based on my LTV. However when I asked how they value my house, they said from a national database. This value is 50k under the current market value. So my LTV is higher than what I think should be.

There is a 1k fee and when I asked what the fee was for they could not really answer.

So I guess my question are is this common practice and is there anything I can do ? To either get them to accept MY LTV or remove the fee which seems pointless and way to make money.

I assume the answer is no but just wanted to double check :P Thanks

kingstreet

You may have the option of a drive-by valuation or internal inspection - at your cost. Ask.

Lenders usually offer better rates with a product fee than without and the size of your mortgage and the duration of the deal will determine what is best.

This is a customer retention product. Look at other lenders' remortgage deals if you wish to consider a new mortgage to repay the current one.

Thrugelmir

millwalll wrote: »

So I guess my question are is this common practice and is there anything I can do ? To either get them to accept MY LTV or remove the fee which seems pointless and way to make money.

You could ask for the property to be revalued by a surveyor , though this would cost you a fee. Your LTV is an opinion not a fact unfortunately.

Product fees are non-negotiable. They are set to target products at a certain market segment of customers. Lenders need to make a profit otherwise they'd go out of business.

millwalll

Sure I understand they need to make a profit. I thought they made a profit on the money the lent you. you lend x amount they make profit from the interest they charge you.

Thrugelmir

millwalll wrote: »

Sure I understand they need to make a profit. I thought they made a profit on the money the lent you. you lend x amount they make profit from the interest they charge you.

The fee is factored into their calculations. A way of only restricting advances to mortgages large enough to be of commercial value. Mortgage lending margins are wafer thin. You'll be contributing to the cost of recovery services etc.

kingstreet

millwalll wrote: »

Sure I understand they need to make a profit. I thought they made a profit on the money the lent you. you lend x amount they make profit from the interest they charge you.

They raise the rate swaps in the money market to make fixed rates possible. The terms involved in setting such a rate include product fees and early repayment penalties.

As stated, eg the higher the fee, the lower the rate and eg the higher/longer the ERC the lower the rate.

millwalll

Thanks I thought this was the case but just wanted to double check. As Paying 1k fee is not peanuts.

millwalll

We are currently with Barclays and the rates which are slight cheaper have a 1k fee other rates are free but they have a higher rate.

Well the bank estimate the house price has gone up by 10k, however houses that are smaller in the same location have sold for a lot more recently. So we are estimated our property valued based on what has been sold. Which to us is a good metric as house it only worth what someone is willing to pay for it.

Im not sure how they value the house they only told us they have a database and its based on that value.