Mortgages: To fix or not to fix?

[JB3000]

And if fixing, for how long?

[MarillionFan]

And if fixing, for how long?

Depends on your level of risk.

I've just remortgaged a property and doing another. The first I went with variable at 1.79%. The second I may fix but as the variable rates are below saving rates any hike in interest would be offset by a hike in savings.

[TheCyclingProgrammer]

I'm on the verge of completing on our first house. We are fixing for 2 years at 2.59% (83% LTV).

We will be below 80% LTV at the end of the fix so should have access to better rates if the base rate stays the same, but I don't know whether we will fix or not until the time comes. If business is good, we might be able to make enough overpayments to get down to 75% LTV.

Overall goal is to get close to 65% LTV in 5 years. I'm not accounting for increases in our property value though, just thinking in today's terms.

[BrilloPad]

No chance of a rate rise for a very long time.

[TykeMerc]

No chance of a rate rise for a very long time.

I wouldn't say no chance, but unless the financial and political climate changes a lot I'd agree that the odds are very long. Not sure of the value of a fixed rate at the moment unless you really need the certainty.

[TheCyclingProgrammer]

Even fixed rates are coming down. Read into that what you want about the lenders own outlook.

Our fix with Coventry was about 2.68% when we first arranged it back in October. It came down to 2.59% and we switched product (still not completed) for no extra fee. They've dropped their application fee of £199 too. I now see its dropped again to 2.49%.

Currently weighing up whether it's worth switching again for the sake of £13 a month given we are hoping to exchange by the end of the week. Waiting for our brokers opinion.

[vwdan]

I wouldn't say no chance, but unless the financial and political climate changes a lot I'd agree that the odds are very long. Not sure of the value of a fixed rate at the moment unless you really need the certainty.

I think need is a little overstating it, but I'd rather pay a bit more for a guarantee of stability over the next [x] years.

[d000hg]

Here's a random mortgage question that doesn't deserve its own thread.

When you buy a house and get a mortgage, the LTV is calculated based on how much you want to borrow and how much you are paying*.
When you re-mortgage, after having paid some of the loan back, you want to borrow less so the LTV has changed. But, will they always use the previous value (sale price) in the calculations?
If your house has gone up in value by 20% (according to valuers the lender trusts) since you bought it will you get an even better LTV? Or does the value used for LTV purposes 'stick' until the house actually gets re-sold?

Our 2-year fixed deal is about to end so I'm about to start looking around - as well as monthly payments and overpaying about 10% of the loan, it appears prices have risen here.





*I know they can reject your price reflects the value but let's not go there

[Power Mortgages Ltd]

Here's a random mortgage question that doesn't deserve its own thread.

When you buy a house and get a mortgage, the LTV is calculated based on how much you want to borrow and how much you are paying*.
When you re-mortgage, after having paid some of the loan back, you want to borrow less so the LTV has changed. But, will they always use the previous value (sale price) in the calculations?
If your house has gone up in value by 20% (according to valuers the lender trusts) since you bought it will you get an even better LTV? Or does the value used for LTV purposes 'stick' until the house actually gets re-sold?

Our 2-year fixed deal is about to end so I'm about to start looking around - as well as monthly payments and overpaying about 10% of the loan, it appears prices have risen here.

*I know they can reject your price reflects the value but let's not go there

A new lender will want to do a valuation on the property to ensure it is suitable security for their lending purposes and to also understand what the property is currently worth so you would benefit from the increase in value of the property to provide you with a better 'loan to value'.

If you stay with your current lender they are less likely to come out to do another valuation on the property just for a product switch. However, in the majority of cases the lender will do an automated desktop valuation on the property which should account for how much the property has increased in price. Lenders tend to have a figure on their system as to how much your current property is worth too which is based upon the valuation they would have done 2 years ago plus the increases in property value in your local area based upon a national database. If they already hold this valuation figure on their system then they may not even need to do a desktop valuation and could tell you there and then what they think your property is worth and consequently what loan to value you currently sit at.

Hope that helps?

Ben

[d000hg]

Thanks Ben, that's most helpful.