Re mortgage or stick with interest only and overpay?

col81

My credit score is now 999 on Experian with no blemishes. Full employment history earning £45k. Current house value £150k owe £118k no redemption penalties and currently on interest only paying £330. Should i look to remortage to capital repayment or stick and overpay?

Any advice is good

comeandgo

Depends on what your interest rate is.  If you can get a lower interest  repayment deal I’d look into that but you can get greater flexibility if you stay on the interest only and put in payments when you can.  

[Deleted User]

Can you overpay to get to 75% ltv?  You're interest rate isnt great and a remortgage would be worthwhile but even more so at 75% ltv

col81

i have been paying £400 pcm. What do i need to get it down to approx to get a better rate. Also how does the valuation work? do i get a estate agent out and go off that? If it is touch and go how do you know where you stand with the valuation?

col81

£112500 worked that one out

[Deleted User]

if its touch and go i usually try go a bit above and see what happens.  Especially if its a free valuation and you arent under time pressure.   For instance if you put £160k down then would that be ridiculous?  Might sneak through on a desktop valuation maybe.  Its a self selected figure but it has to be grounded in reality somwhere.   
Just have a look at the area and think if you can get to a figure above £157500.  

Keep in mind that you wont be looking at an interest only mortgage if you remortgage.  It will be capital repayment.  Howver the interest rates will likely be around half of what you are currently paying so you will pay the mortgage off a lot quicker as you are paying less interest. 

col81

What happens if i put £157000 and then it gets to the end of the application is checked to be then told it is worth £150K? i can see if i can get it to 75% i would be paying a very similar amount to what i am now

col81

Zoopla says estimated value £155k with a low estimate of £125k and high of £185k 

K_S

col81 said:

What happens if i put £157000 and then it gets to the end of the application is checked to be then told it is worth £150K? i can see if i can get it to 75% i would be paying a very similar amount to what i am now

@col81 If a down-valuation is the only hitch in the application, they will usually ask you/broker to re-select a product in the next LTV band if you want to proceed. So 80% LTV using the numbers you have cited  - 118k loan on a 150k valuation.

col81

Great advice thank you. I will get a local estate agent out to value. The house has 3 times as much land as others in the area. It is a big corner plot so i will get them out. I will then keep my bank accounts very clean for a couple of months and move forward with a application.

getmore4less

Your rate at ~3.35% is a bit steep  even for 80% LTV
Which lender and product?
they may have something.

An option might be to look at lenders with a track(no ERC) and fix options.
Get the rate down on repayment then fix when you hit the 75% if not already there.