Mortgage Help - LTV/Remortgage

clublandrefugee

clublandrefugee

Active member
Any advice is welcome

Trying to get my head around mortgages and LTV

If I buy a house for 100k with a 25k deposit, I have a LTV of 25%, on a 2 year deal - borrowing 75k

If after 2 years is up, I remortgage to get a better or similar deal, and the value of the house goes up 10k
Has my LTV changed in my favor?

Meaning the house is worth £110k, I have 35k equity in the house and will still be borrowing 75k

Or is the house worth £110k, I have 25k equity in the house, and will need to borrow 85k to remortgage?
 
Providing after two years your new mortgage lender agrees that the house has went up in value then you would have a £110k house with £35k+ equity. I say plus on the basis it's a repayment mortgage and not interest only.
 
The Loan to value is the amount of mortgage outstanding compared to the valuation of the property. If you owe 75k and the property value is 100k then your LTV is 75%

For a property around that value many lenders will just go from the index linked value (postcode average for your type of property).

The bigger the gap between what you owe on the loan and the value of the property the better when it comes to being offered news mortgage rates and further loans.
 
clublandrefugee said:
Any advice is welcome

Trying to get my head around mortgages and LTV

If I buy a house for 100k with a 25k deposit, I have a LTV of 25%, on a 2 year deal - borrowing 75k

If after 2 years is up, I remortgage to get a better or similar deal, and the value of the house goes up 10k
Has my LTV changed in my favor?

Meaning the house is worth £110k, I have 35k equity in the house and will still be borrowing 75k

Or is the house worth £110k, I have 25k equity in the house, and will need to borrow 85k to remortgage?
Click to expand...
No. You have a loan (75k) to value (100k) of 75%.

It's simply an equation which is equal to how much money you owe compared to the agreed valuation.

In simple terms as your value goes up, your mortgage usually goes down as you pay the balance and interest and thus your LTV usually goes down and gives you more attractive rates.

I beleive the best rates are often offered when you're LTV goes to 60%and below.
 
Emmersons_BrazillianDong said:
No. You have a loan (75k) to value (100k) of 75%.

It's simply an equation which is equal to how much money you owe compared to the agreed valuation.

In simple terms as your value goes up, your mortgage usually goes down as you pay the balance and interest and thus your LTV usually goes down and gives you more attractive rates.

I beleive the best rates are often offered when you're LTV goes to 60%and below.
Click to expand...
Ah yes sorry, cheers for clarifying
 
As long as your original deal allows you to do a completely new deal after 2 years - you should be able to get a better deal after 2 years when you borrow less as a percentage of the value of your house. say 75% to 60%

Improvements you make to the house can push the value up, not just market changes.

Also with a repayment mortgage you are usually paying some of your loan off every time you make a payment.
 
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