Re-mortgaging with next to no equity

[GetKnitted]

I hope somebody can help with this. I expect it is not that complicated but having never done it I'm just not sure.

We're getting close to the end of our fixed-rate term of our mortgage and are thinking about remortgaging to get a better deal. But, we bought close to the top of the market and have only paid off about 14% of the original value (including our 10% deposit).

I think that if we revalued the house for a re-mortgage they would value it for quite a bit less than we paid and we probably wouldn't have the 10% deposit needed to get a good deal on the new mortgage.

I'm not so worried about being turned down for the re-mortgage, but I AM worried that it would somehow affect the mortgage we've got currently. Could they do something nasty to us if we had next to no equity?

Thanks for reading!

I'm not a mortgage expert, but yes, you'd probably struggle to get a good remortgage deal with only a 14% deposit. However, don't worry about them doing anything nasty! All that will happen is that you will move onto their SVR (which might not be much more than your current rate - may even be less).

There are thousands of people in your predicament (or worse) and their lenders know they have a lot of customers in negative equity. As long as they can continue to pay their mortgage, lenders really aren't interested in how much equity is in your house.

Hi, I work as an IFA and the above it true, you can look around for a new scheme and try to get something better, if it doesn't work then you come off the fixed and onto the SVR follow on rate.
The current lender will not find out how your house values if you choose to apply elsewhere.
If you say which lender it is I will prob know what the SVR is you will go on to?
Hope this helps

Thanks MsV and Flumpy

Actually the standard variable rate will probably be better than our fixed rate .

I/we were so convinced that nothing was ever going to get cheaper and rates would never go down that we managed to buy and fix high. So if that's all we have to worry about we should be alright.

Flumpy, you mentioned that the current lender wouldn't know what the value was if we applied elsewhere, would you avoid applying for something with the current lender? It's just Natwest, nothing special, we had a friend in the graduate banking section at the time.

Thanks for the advice.

I would, if you are sure the equity is low then they are probably just going to turn down a new rate and try to sell you something irrelevant u don't need like an insurance of some kind! Since SVR is lower try to keep the Payments the same so you overpay, this will reduce the balance quicker and increase equity. Then you can keep eye out and jump ship to a good 15% equity scheme whenever it looks good

Or of course have fun with the extra money, gawd I bore myself sometimes!! Good luck

Thanks Flumpy and MsV, really grateful that you and the other good people of mumsnet are so generous with your time.

cross-posted. hehe you made me laugh :) Thanks!