would it be a good idea to remortgage now

mdavids

First of all the facts:
Bought house in June 2006 for £87,000

3 year repayment tracker mortgage with halifax now at about 6% and £500 per month which reverts to SVR in June 2009.

Outstanding mortgage of £82,000 with an early redemption fee of about £1000

House "worth" realistically about £100,000 in the present market.

About £10,000 in savings and a £25,000 salary which is safe for the foreseeable future and an excellent credit rating.

With everything apparently going pear-shaped in the financial world and so much doom-mongering with regards to house prices, my main worry is negative equity. Worse case scenario is house prices dropping drastically over the next 18 months so that when the time comes to re-mortgage, I have to get a 100% or more mortgage or stick with my present lenders SVR. This may seem pretty unrealistic given the above figures but 4-5 years ago houses like mine were selling for £50-£60,000 and its not impossible for them to end up at that point again or less if we get the predicted bad economic recession.
My question is would it be a good idea to pay the early redemption fee on my mortgage and remortgage now on a long term fixed rate whilst my house is still "worth" £100000 and I only need a 75% mortgage. I know that no one can predict exactly what is going to happen regarding the economy and house prices but I think everyone agrees that things aren't looking rosy

UK007BullDog

You have to work out that any product you take now is worth you doing that including the £1K you need to pay. This probably means you need to find the lowest fixed rate available for 5 years, add the fee which could be £499 - £999 or more.

Gorgeous George has a calculator type spreadsheet that would help you with this. But don't forget to add all of the fees you need to consider.

Personally you have been reading too many doom monger stuff. It ain't that bad yet and I would just sit tight and wait it out.

loveandlight

I am also considering a re-mortgage. I am currently on a SVR with no early repayment penalties. I found out the other day from my mortgage adviser that according to my possible new lender's valuation system, my property has GONE UP BY 10% and they either will do a drive by valuation or none at all, as I am already with one of their branch companies.

In reality, my property has gone DOWN BY 10% and in fact they are not selling here at all! I even checked another lender's system and lo and behold, according to that system as well my property has gone up again by 10%

Some people will think because of the lender's internal valuation systems, they have more equity in their homes than they actually do and maybe take some of it out, only to then find themselves in an immediate negative equity situation.