Future Options (Current HSBC mortgage)

Chrisa10

Hi - i have had a quick look back the past couple of pages and not found anything that really answers this, but if im wrong please point me in the right direction!

Just over 2 years ago i took out a mortgage with HSBC, who gave me 'graduate' privaliges - which amoung other things enabled myself and my friend to take out a mortgage with little (comparative) deposit. At the time we were happy to do this, but i am not starting to worry we were slightly short-sighted.

The mortgage is for £162,000, which is approximately 95% of the property value as it stands now (it was closer to 100% when the morgage was first taken out). Our combined wages are £68,000, and apart from my graduate loan we have no other outstanding debt, or bad credit-history.

We have now come out of a 2yr discounted period, and even with the fluctuations in interest rates we have been able to comfortably keep on top of our monthly payments, but my friend keeps saying about changing to a fixed rate.

My question is that if we decided to try and re-mortgage in the future, would we struggle as the morgage value to house value isnt that great - and one assumes that most lenders will be trying to stop the near 100% morgages in the future.

Whilst lenders take into account wages, credit history and so on, will the fact that we have not missed any payments on our current mortgage (ergo good credit history) be enough to convince them to give us a mortgage ?? Or do companies stick rigidly within their product framework?

Any comments/help/advice greatly appreciated.

beecher

I suppose you need to find out for sure what the property value is to make sure you're at the 95% LTV. If it is a new build it may have gone down in value, depending on where you live.

Why not go to a broker and see what they say - you seem in a stronger position than many and would be able to find out what deals are out there.

Chrisa10

The property is about 4 years old, and they are building brand new ones (same spec) just round the corner for £175,000, but i am under no illusion that that ours would sell for that.

I guess the hardest thing is the arbatry nature of valuing the property - how realistic/hard are valuers (for lenders) when they 'price' a property, especially in times like this where there could be considered to be a down-turn in property values.

Trying_to_be_good

You won't know until you try!

You say you're now out of the discounted period - does that mean you're paying SVR? Can your current lender offer you a better deal? Might be as easy as making a phone call to them.

beecher

You could check on ourproperty or nethouseprices and see what neighbouring flats have gone for. I'd go and see a broker and see what they can offer you anyway - you won't lose anything by doing so. Or maybe you could phone the HSBC first and see what they can offer you - getting a new deal might not involve the same sort of valuation as a remortgage with another company. (though best to ask an expert if this is the case - I'm just going on my experience)

I do think the LTV is what is important - your credit history is unlikely to make them change their criteria if you don't measure up to it.

Chrisa10

Trying_to_be_good wrote: »

You say you're now out of the discounted period - does that mean you're paying SVR?

Excuse my ignorance - whats SVR?

beecher

Standard Variable Rate - what % are you paying now that your discount has come to an end?

Chrisa10

current svr is 6.5%

beecher

HSBC's lifetime tracker is 5.99% but according to the website the maximum LTV is 90% so you might have problems getting a new deal with them. Give them a call and find out though.

JimmyTheWig

I'd say remortgage and remortgage quick.
1. You're paying a higher rate than you need to.
2. The credit crunch might make things harder in the future.

Couldn't work out how to find the best deal on MSE (I guess the point is go to a broker) but tried on money.msn.co.uk and they suggested Derbyshire Building Society (thederbyshire.co.uk). They've got 2-year, 5-year and 10-year fixed rates for 95% LTV.
Their 2-year fix (5.29%) would save you about £2000 a year, more than enough to make it worth paying the arrangement fee.

I'd say stick to 2 or 3 year deals if buying with a friend - you never know what might happen down the line and don't want to be tied in forever.

Chrisa10

ok - many thanks - ill have a look into it....