House price drop/crash and re-mortgaging with the same provider

LEP

I currently have 2 BTL properties with about 25-30% equity in them, both of which I will be looking to secure a new deal with the same provider (Post Office and Virgin Money) in about 10 months time.

I am conscious of a potential drop or even crash in house values as a result the economic impact of COVID19 and how this would impact my ability to re-mortage to a new deal.....if we see a 10+% drop I am going to be well below the 75% LTV needed. Obviously if I cannot get a new deal I'd have to sell, put in some of my savings or go on the standard variable rate....none of which particulary appeal to me.

Does anyone know what the general principle is with re-mortaging with the same provider in terms of them looking at LTV after significant drops in house prices? Looked on Virgins website and they said a new valuation may be required to be carried out when switching mortgage deals with them.

Thanks

ACG

There isnt a general rule of thumb, my mortgage is with Virgin and I switched products last year, I am sure they just worked off the original valuation (but dont hold me to that), so you may find all is ok. 

There is no sign house prices are dropping though. People in chains are still completing (albeit slowly) and holding firm. Unlikely but demand for homes is still there, if less people put them on the market then you could find house prices rise. 

LEP

That's in normal times though, I am talking about a potential crash....I guess the only recent example of this was after the 2008 crisis. 

ACG

I dont think banks will change their processes over this, not at the minute anyway. There is no sign of any long standing problems. 

Banks have too much money, they want to lend. Not one lender has said anything otherwise, I know someone fairly high up in one of the lenders who I go for beers with (or did pre corona days) and he has said they want to lend money - they need to. So I think everything will be fairly stable. 

Durban

LEP said:

I currently have 2 BTL properties with about 25-30% equity in them, both of which I will be looking to secure a new deal with the same provider (Post Office and Virgin Money) in about 10 months time.

I am conscious of a potential drop or even crash in house values as a result the economic impact of COVID19 and how this would impact my ability to re-mortage to a new deal.....if we see a 10+% drop I am going to be well below the 75% LTV needed. Obviously if I cannot get a new deal I'd have to sell, put in some of my savings or go on the standard variable rate....none of which particulary appeal to me.

Does anyone know what the general principle is with re-mortaging with the same provider in terms of them looking at LTV after significant drops in house prices? Looked on Virgins website and they said a new valuation may be required to be carried out when switching mortgage deals with them.

Thanks

I agree with you.  I have a BTL with Accord that is coming up for remortgage.  Luckily , I can reserve a product transfer in a months time. Accord definitely do not go on the original valuation and have told me that my property value has dropped when I spoke to them last week.  Not by much but certainly a drop.  I will be putting in some money to bring it to a 65% LTV.

ACG - as a mortgage broker - do you see mortgage lenders bringing back 95% LTV .  This is sometimes the only way that a First time buyer can get on the property ladder?

ACG

Yes but only when the lockdown is lifted and valuations can be carried out. 
It might take a month or so after but there are at least 3 lenders I think doing 90% LTV so as soon as things get back to normal it should not take too long to get back to 95%.

Bibbitybobbitybop

ACG said:

Yes but only when the lockdown is lifted and valuations can be carried out. 
It might take a month or so after but there are at least 3 lenders I think doing 90% LTV so as soon as things get back to normal it should not take too long to get back to 95%.

My broker has told me no lenders are doing 90% at the mo? We're about to put in an app for 85% be need 90% preferably. I trust him of course and there are a few factors which rule me out of the 90% option - self-employed (going on 2yr accounts due to v sharp recent increase in profit) and husband not on mortgage. Would this rule me out of those 90% options? 

Thrugelmir

LEP said:

Does anyone know what the general principle is with re-mortaging with the same provider in terms of them looking at LTV after significant drops in house prices?

10 months at the current time is too far away to predict anything. Any increase in risk to the lender would be priced into the interest rate levied/product fee charged though. 

ACG

Bibbitybobbitybop said:

ACG said:

Yes but only when the lockdown is lifted and valuations can be carried out. 
It might take a month or so after but there are at least 3 lenders I think doing 90% LTV so as soon as things get back to normal it should not take too long to get back to 95%.

My broker has told me no lenders are doing 90% at the mo? We're about to put in an app for 85% be need 90% preferably. I trust him of course and there are a few factors which rule me out of the 90% option - self-employed (going on 2yr accounts due to v sharp recent increase in profit) and husband not on mortgage. Would this rule me out of those 90% options? 

Possibly. Im not sure to be honest, its something I would need to sit down and research as I do not know the answer for those particular lenders but there is a possibility that 1 or both of those things could rule them out.