Really silly questions about mortgage

[Dollywilde]

Sorry for how stupid these are. I should know this! We bought our first house 4 years ago and fixed for 5 years, so our fixed rate deal ends next summer. I’ll be on maternity leave when it does so I’m looking to clue myself up well in advance...

• when our fixed rate ends, if we go onto the lender’s standard variable rate, do they still use the calculations from when we bought the place or do they re-value it? We bought the place as a wreck and have renovated, so there’s quite a substantial difference from an equity perspective if they revalue it. I’m trying to work out if our repayments will change...

• we’re looking to move when I go back from maternity leave, annoyingly the fixed rate ends in June next year and we’ll be looking to put the place on the market in September. In this scenario would most people stay on the standard variable, remortgage to a short fixed term deal (and accept the early repayment charge when moving) or look for a mortgage with portability? I’m not sure if that would even be possible as we’d be looking to significantly up our borrowing for the new house?

Like I say, sorry, I really ought to know this but struggling to find info online! We went through a broker when we got the mortgage and I’d probably use one again but I feel like I need to know how this works before we start the process again next spring...

They won't re-value it. It will just be based on the remaining amount you owe.

You could probably pay them to revalue it?

Talk to your mortgage people about moving with a fixed rate in place. When we moved and massively increased our mortgage they waived any early repayment fee of the old mortgage and transferred the debt to the new mortgage. This would only work if you were borrowing from the same people, but I would think they’d be pretty interested in loaning you lots more money!

You will automatically move onto their SVR, yes. The new equity % is irrelevant unless you change product with them - usually incurring a product fee and possibly a new fixed period, depending on the product.
Yes, most people would just go into SVR - especially at the moment when it’s unlikely to be very high - it could be lower than your current fixed rate!

Some SVRs are very high compared with fixed rates, eg 4-5% compared with 1-2%, so you need to check as your payment could increase quite a bit. It will say what will happen in your mortgage paperwork.

Fixed rates are often portable so if the SVR is too high to stay on for a few months, while you move house, you could take out one of those, or see if you can get another deal with no early repayment charges, they must exist somewhere. Or you might find you could change to another lender with a lower SVR.

I did mine last year with NatWest - they do revalue it - they don't send anyone round or anything but have an online assessment tool which draws on local selling pricing etc. We had renovated ours and the new revalue put more equity back so we got a cheaper deal

You will automatically move onto SVR when your fixed rate product ends, there will not be a valuation for this to happen. Your mortgage lender will have a standard SVR rate, so you’ll be able to check what this is and compare it to your current deal to get an idea of what the change in monthtly payments will be. Remember that SVRs are variable and can and do change. As you mention, your options are to stay on SVR or to move to a new product which can be ported across to a new property. You will most likely need a valuation if you take out a new product. When you move, you wojld port the mortgage across across and then take out another mortgage product for the ‘top up’ amount if the house you are buying is worth more. So you will have 2 products contained within one mortgage. If its only a gap of a few months, maybe worth considering staying on SVR for a short period but your best bet is to speak to a mortgage advisor who will be able to advise the best options

Someone above has said they do revalue for SVR, so sorry if I got that bit wrong

Thanks everyone! This is really helpful. I’ve done the maths and at the moment it looks like the SVR (if I do the maths of amount left/time left/rate - that’s right, right?) comes out at pretty much the same per month as our fixed rate repayments. So assuming rates don’t change too much between now and next year, hanging on the SVR for the few months in the middle may make sense.

That said it’s annoying as we could reduce our repayment by a third by going onto a new deal with a fairly conservative revaluation of the property (had an estate agent around after we finished the work and even after a reduction for covid and EA inflation I think our equity would go from about 20% to 30%). And being able to save that money towards the move would be really helpful (about £2500 saved over 5 months rather than the fairly insignificant dent 5 months of increased mortgage repayments would benefit us). So if we could get a mortgage where the lender would be happy to move with us then I guess that would be idea... one for asking the broker about early next year I guess.

They do re-value - I've just changed rates as my 2 year fixed ended. It's an automatic valuation based on sold properties in area/database/algorithm that they use. Based on their 'valuation' 2 years ago vs now, mine increased by 10.3%

And when we've moved we've transferred the mortgage with us, and then borrowed more money - so you should be able to do this....

@ivfgottostaypositive

I did mine last year with NatWest - they do revalue it - they don't send anyone round or anything but have an online assessment tool which draws on local selling pricing etc. We had renovated ours and the new revalue put more equity back so we got a cheaper deal

Yep, this was how our house was re valued when we changed mortgage terms. They valued it about 15k more than we thought, so worked well for us in terms of LTV

You should also ask your broker about mortgage deals without an early repayment charge - then you won’t be tied in when you move and can choose whether to port the existing mortgage or get a new one depending on what gives you the best option at the time.

Also worth letting your broker know about your move plans before you meet with them, that way they can run through a few scenarios with that in mind and present you with some specific options.

You get a better deal if the LTV is taken into consideration

It’s worth getting it valued and speaking to your mortgage provider anyway.

You could also see if you do fix again if the product is portable. We just moved this year and took the fixed rate with us.