| Mortgage help 18:20 - Jul 14 with 1484 views | FrimleyBlue |
Quick question for a friend as I've no idea
If you're coming to the end of an interest only mortgage and the value of the property increased to say 200k from 150k.. if you look to sort out another interest only mortgage... is it based on the orignal 150k or the new value of the property at 200k? |  |
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| Mortgage help on 18:22 - Jul 14 with 1455 views | giant_stow |
The 150 / whatever the loan was |  |
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| Mortgage help on 18:33 - Jul 14 with 1405 views | bluefunk |
A remortgage is based on the current property value, |  | | |
| Mortgage help on 18:51 - Jul 14 with 1357 views | giant_stow |
| Mortgage help on 18:33 - Jul 14 by bluefunk |
A remortgage is based on the current property value, |
Apologies all - I thought it was how much is he going to borrow. I'll stand down in disgrace. | |
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| Mortgage help on 20:07 - Jul 14 with 1232 views | Rob88 |
| Mortgage help on 18:51 - Jul 14 by giant_stow |
Apologies all - I thought it was how much is he going to borrow. I'll stand down in disgrace. |
I think you are correct.
If you come to the end of your term and if you don’t want the SVR offered by your lender then you remortgage. When you remortgage you can either do so against the value of the loan (as you said) or you can take a larger loan if you want to release any equity you may have within the property (as long as you still meet the lending criteria (LTV)).
Disclaimer: I’m an Engineer not a mortgage broker. I’m 98% sure the above is correct.
Edit: value of the loan at the time of remortgaging. [Post edited 14 Jul 2022 20:19]
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| Mortgage help on 20:16 - Jul 14 with 1205 views | BanksterDebtSlave |
| Mortgage help on 18:33 - Jul 14 by bluefunk |
A remortgage is based on the current property value, |
I realise that this is grown up stuff so I am out of my depth but surely it should be based on the amount of mortgage still outstanding! |  |
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| Mortgage help on 20:57 - Jul 14 with 1132 views | bluefunk |
| Mortgage help on 20:16 - Jul 14 by BanksterDebtSlave |
I realise that this is grown up stuff so I am out of my depth but surely it should be based on the amount of mortgage still outstanding! |
I was perhaps a little too brief - when you remortgage, the loan you can take, and the rate applicable will always be based on the value of the property as assessed by a survey paid for by the lender. Obviously you would have to pay the existing mortgage, and so you are correct, but if you chose to borrow more (assuming it’s possible) then that’s yours (you willhave to justify a larger loan though.
Edited for auto correct! [Post edited 14 Jul 2022 20:58]
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| Mortgage help on 21:19 - Jul 14 with 1075 views | BanksterDebtSlave |
| Mortgage help on 20:57 - Jul 14 by bluefunk |
I was perhaps a little too brief - when you remortgage, the loan you can take, and the rate applicable will always be based on the value of the property as assessed by a survey paid for by the lender. Obviously you would have to pay the existing mortgage, and so you are correct, but if you chose to borrow more (assuming it’s possible) then that’s yours (you willhave to justify a larger loan though.
Edited for auto correct! [Post edited 14 Jul 2022 20:58]
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Thanks...so would a higher nominal value equate to a lower rate as in the event of a default the loan is more secure? | |
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| Mortgage help on 21:25 - Jul 14 with 1057 views | Swansea_Blue |
| Mortgage help on 18:51 - Jul 14 by giant_stow |
Apologies all - I thought it was how much is he going to borrow. I'll stand down in disgrace. |
I think you’re correct too. The loan is always against the purchase price minus what been paid off on that loan so far. Amount owned can’t increase with house prices otherwise most people would never pay off a mortgage! |  |
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| Mortgage help on 21:41 - Jul 14 with 1017 views | bluefunk |
| Mortgage help on 21:19 - Jul 14 by BanksterDebtSlave |
Thanks...so would a higher nominal value equate to a lower rate as in the event of a default the loan is more secure? |
The loan rate is assessed by the percentage of loan to the value, eg borrowing £150k against a value of £200k is a 75% loan to value (LTV) which would attract a lower rate than say a 90% LTV. - hope that answers your question | | | |
| Mortgage help on 10:13 - Jul 15 with 807 views | bluestandard |
Depends what you mean by ‘it’ in the last sentence! The applicable interest rate will be applied to the amount of the outstanding mortgage (obviously), but when you remortgage, there is the opportunity to apply for a different interest rate if the value of your property has gone up, such that it puts you in a different (better) loan to value category. | | | |
| Mortgage help on 11:26 - Jul 15 with 749 views | mutters |
Simply put, your mortgage (loan) is based purely on the amount of money you borrow. So in the example, you gave, as it has been an interest-only mortgage the amount borrowed has remained static at £150k. If they had had a repayment mortgage then some of that original £150k would have been repaid during the previous mortgage term.
What types of mortgage rates they can borrow at is dependent on LTV (Loan to Value), which is basically what percentage the loan is to the value of the house. As the house prices risk it can unlock different rates at different bands depending on the equity percentage. Roughly the rate bands are 5%, 10%, 20%, 25%, 40% equity in a house though they do flex depending on each lender. |  |
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| Mortgage help on 12:23 - Jul 15 with 703 views | CityBlue |
As any further lending would be "secured" against the property, the figure would be its' current value and not your original mortgage valuation. |  |
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| Mortgage help on 13:08 - Jul 15 with 657 views | BlueandTruesince82 |
It's based on current value. If the value has gone up your loan to value ratio may come down, I believe that's done on a % so applies only if as you get below a threshold but the price has gone up, the outstanding amount has gone down which should equal a better rate, though rates have of course all gone up.
For my 5 year fixed I've been quoted 3.38% which I'm probably going to jump on as defo more room to go up than down |  |
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| Mortgage help on 18:05 - Jul 15 with 550 views | Rob88 |
Jesus. Maybe me being very slow. It’s only from reading others answers to your question that I understand what you are asking now.
And simply….. the % is based on the LTV which is based on the current property value and the outstanding borrowing (loan amount) against the property. | | | |
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