Mortgage advice

[VALDOS']

Can anyone advise on the situation of a mortgage valuation against the home report valuation.

In other words if the Home Report states 280k but the purchase price is 300k, will the lender calculate a mortgage based on the 280k and you would need to make up the difference (20k) from your own funds?

If that makes sense.

[Dennis Reynolds]

Yes you are correct.

[Bigsmak]

3 hours ago, VALDOS' said:

Can anyone advise on the situation of a mortgage valuation against the home report valuation.

In other words if the Home Report states 280k but the purchase price is 300k, will the lender calculate a mortgage based on the 280k and you would need to make up the difference (20k) from your own funds?

If that makes sense.

 

Yes - The bank will only lend against the 'Value' of the property not what you actually paid for it. 

 

If you put yourself in their shoes - Imagine a friend wanting to borrow money from you to buy Object A - This is valued at £100 - they promise you that if they miss repayments, they will give you Object A to cover the loan off.  Now you wouldn't lend them more than £100 as you have been told thats what the value is and if they miss the payments you need something that is worth what you lent.  If your friend choses to pay £120 for the Object.. thats his choice. 

 

So for a mortgage, all the calculations - 80% or 95% whatever, is always based on the home report! 

 

[jambo89]

5 hours ago, VALDOS' said:

Can anyone advise on the situation of a mortgage valuation against the home report valuation.

In other words if the Home Report states 280k but the purchase price is 300k, will the lender calculate a mortgage based on the 280k and you would need to make up the difference (20k) from your own funds?

If that makes sense.

Yes, having just bought / got a new mortgage myself, they will only lend 80% - 90% of the home report value (there are some 100% mortgages I believe) 

[1971fozzy]

It’s a nightmare for buyers at the moment. House valued at £200,000 but goes for £250,000

buyer can only get a mortgage on  80% (for example) of the £200,000 so would have to find £90,000. As an example.

Nightmare for first time buyers

 

[Jeff]

2 hours ago, 1971fozzy said:

It’s a nightmare for buyers at the moment. House valued at £200,000 but goes for £250,000

buyer can only get a mortgage on  80% (for example) of the £200,000 so would have to find £90,000. As an example.

Nightmare for first time buyers

 

 

Is the help to buy scheme not a thing anymore? Found that very helpful when starting up

[1971fozzy]

17 minutes ago, Jeff said:

 

Is the help to buy scheme not a thing anymore? Found that very helpful when starting up

👍

[VALDOS']

Cheers for all the advice, I kind of figured this would be the case, but did wonder if you could get a separate mortgage valuation done to bump it up a little.

Anyway, it definitely looks as though I'll need to go 10-15k over the home report value, I've missed out on a few now by only going 5 or 6k over.

[milky_26]

8 minutes ago, VALDOS' said:

Cheers for all the advice, I kind of figured this would be the case, but did wonder if you could get a separate mortgage valuation done to bump it up a little.

Anyway, it definitely looks as though I'll need to go 10-15k over the home report value, I've missed out on a few now by only going 5 or 6k over.

friends of mine have missed out and they went 40k over asking price

[Jambo 4 Ever]

What’s the best thing to do if you have a mortgage - a 5 year fixed? With interest rates going up etc?

[hughesie27]

10% or so over the valuation for most sales these days. 

[Dennis Reynolds]

32 minutes ago, Jambo 4 Ever said:

What’s the best thing to do if you have a mortgage - a 5 year fixed? With interest rates going up etc?

 

If you're on a fixed rate, the interest rates rising won't effect you until the end of the fixed rate. 

[Jambomuzz]

1 hour ago, hughesie27 said:

10% or so over the valuation for most sales these days. 

I was lucky and got mine for home report at the end of 2021. It needed significant investment to renovate however 17.5% of the value or so. If people don’t mind a challenge and have the funds it’s another option. 

[Jambomuzz]

What’s the best way to get a no obligation value on your property come to think of it? I fancied seeing how much mine had increased since having all the work done. 

[The Old Tolbooth]

On 23/06/2022 at 14:52, Bigsmak said:

 

Yes - The bank will only lend against the 'Value' of the property not what you actually paid for it. 

 

If you put yourself in their shoes - Imagine a friend wanting to borrow money from you to buy Object A - This is valued at £100 - they promise you that if they miss repayments, they will give you Object A to cover the loan off.  Now you wouldn't lend them more than £100 as you have been told thats what the value is and if they miss the payments you need something that is worth what you lent.  If your friend choses to pay £120 for the Object.. thats his choice. 

 

So for a mortgage, all the calculations - 80% or 95% whatever, is always based on the home report! 

 

 

Mostly true, unless someone manages to purchase a property for under the Home Report value (fat chance these days, I've seen only one in the last 3 years!), and then it's based on purchase price or valuation, whichever is the lower. 

 

You can also get "concessionary purchases", whereby you're purchasing the property from a family member at a knock down price, let's say the property was valued at £100k, and your family member sold it to you for £80k, then you don't need any deposit at all as a lot of lenders will use that £20k equity as your own deposit, it comes in very handy for me sometimes that one. 

 

@Jambo 4 Ever, I've been advising 5 year fixed rates now for quite a while (in fact if I advise anything shorter then my compliance team are checking the reasons why), unless there are extenuating circumstances which call for shorter fixed rates (there's loads of reasons tbf), but I can only see interest rates going up further, so to protect you against this happening, then a 5 year fixed rate will offer you a fair degree of protection, sadly however, your new rate will be a fair bit higher than the rate that you're used to paying, so expect a jump in payments. 

 

Hope this helps 

[Cade]

2 hours ago, Jambo 4 Ever said:

What’s the best thing to do if you have a mortgage - a 5 year fixed? With interest rates going up etc?

Pay back as much as you can before your fixed rate ends.

Otherwise you're going to get skelped.

 

A bit of pain now will hopefully prevent even more later on.

 

Tighten the belts, pay the bank as much as you can.

[jackal]

41 minutes ago, Jambomuzz said:

What’s the best way to get a no obligation value on your property come to think of it? I fancied seeing how much mine had increased since having all the work done. 

https://scotlis.ros.gov.uk/

 

Check for similar houses in your neighbourhood. When I got my last house the valuation was crap because one couple in the street had split up and sold for peanuts just to get away from each other and another sold for peanuts because they came into a good deal of cash. Luckily, I mentioned this and they increased the home report value.

[Jambo 4 Ever]

45 minutes ago, The Old Tolbooth said:

 

Mostly true, unless someone manages to purchase a property for under the Home Report value (fat chance these days, I've seen only one in the last 3 years!), and then it's based on purchase price or valuation, whichever is the lower. 

 

You can also get "concessionary purchases", whereby you're purchasing the property from a family member at a knock down price, let's say the property was valued at £100k, and your family member sold it to you for £80k, then you don't need any deposit at all as a lot of lenders will use that £20k equity as your own deposit, it comes in very handy for me sometimes that one. 

 

@Jambo 4 Ever, I've been advising 5 year fixed rates now for quite a while (in fact if I advise anything shorter then my compliance team are checking the reasons why), unless there are extenuating circumstances which call for shorter fixed rates (there's loads of reasons tbf), but I can only see interest rates going up further, so to protect you against this happening, then a 5 year fixed rate will offer you a fair degree of protection, sadly however, your new rate will be a fair bit higher than the rate that you're used to paying, so expect a jump in payments. 

 

Hope this helps 

Thank you 

[Ribble]

53 minutes ago, The Old Tolbooth said:

 

Mostly true, unless someone manages to purchase a property for under the Home Report value (fat chance these days, I've seen only one in the last 3 years!), and then it's based on purchase price or valuation, whichever is the lower. 

 

You can also get "concessionary purchases", whereby you're purchasing the property from a family member at a knock down price, let's say the property was valued at £100k, and your family member sold it to you for £80k, then you don't need any deposit at all as a lot of lenders will use that £20k equity as your own deposit, it comes in very handy for me sometimes that one. 

 

@Jambo 4 Ever, I've been advising 5 year fixed rates now for quite a while (in fact if I advise anything shorter then my compliance team are checking the reasons why), unless there are extenuating circumstances which call for shorter fixed rates (there's loads of reasons tbf), but I can only see interest rates going up further, so to protect you against this happening, then a 5 year fixed rate will offer you a fair degree of protection, sadly however, your new rate will be a fair bit higher than the rate that you're used to paying, so expect a jump in payments. 

 

Hope this helps 

 

We went 2 year fixed back in November for our new house, may come back to bite us when we renew in nov 23 but our intention was to fork out for a new home report which with just the market inflation would hopefully see our LTV drop from 90% to under 75% and then take a 5 year

[Bordeaux 03]

1 hour ago, Jambomuzz said:

What’s the best way to get a no obligation value on your property come to think of it? I fancied seeing how much mine had increased since having all the work done. 

Most estate agents will do this. Obviously 2 or 3 different valuations will provide better accuracy.

[Der Kaiser]

I feel for those not on the property ladder wanting to be on it.

 

I couldn't buy my own house now. I probably couldn't buy it 6/7 years ago either. My only desire is to have a nice chunk of equity in it for my sons when I pop my clogs.

 

[The Old Tolbooth]

1 hour ago, Ribble said:

 

We went 2 year fixed back in November for our new house, may come back to bite us when we renew in nov 23 but our intention was to fork out for a new home report which with just the market inflation would hopefully see our LTV drop from 90% to under 75% and then take a 5 year

 

I can see the logic in that mate for sure, however I just hope the steep interest rate rises don't eclipse what your plans would be once your fixed rate ends, it's always a gamble with things like that, but I've advised folks to do that before themselves as well, when rates were a lot more stable. 

[hughesie27]

Luckily just signed up to a new 5 year Mortgage in April.

[The Old Tolbooth]

Just now, hughesie27 said:

Luckily just signed up to a new 5 year Mortgage in April.

 

Did you get hit with any rate rises at all before you fixed in? I fixed in October last year for 5 years and I'm hoping that it sorts itself out before it expires. 

[Dean Winchester]

Probably a good thread to ask.

 

What's the deal with overpayments? I got onto a decent 5 year fixed term last summer when the base rate was low (was a fair bit cheaper for 5 years than what I had been paying on the previous 2 year one) and have been able to overpay 10% last year, this year and should be able to do the same for the next 4 years but I don't think overpayments reduce my term so what happens at the end of my fixed term? Do I need to remortgage to reduce the term? As I assume my monthly cost would drastically fall and I'd get hit with overpayment charges if I kept paying the same amount.

[The Fonz]

17 minutes ago, Dean Winchester said:

Probably a good thread to ask.

 

What's the deal with overpayments? I got onto a decent 5 year fixed term last summer when the base rate was low (was a fair bit cheaper for 5 years than what I had been paying on the previous 2 year one) and have been able to overpay 10% last year, this year and should be able to do the same for the next 4 years but I don't think overpayments reduce my term so what happens at the end of my fixed term? Do I need to remortgage to reduce the term? As I assume my monthly cost would drastically fall and I'd get hit with overpayment charges if I kept paying the same amount.

I overpaid a fair bit the last few years and you can (or could with Nationwide at least) choose as to whether you wanted to reduce the term or monthly payments. 
 

At the end of the fixed term you can get a new deal, which if you’ve overpaid 10% each year for a few years will be significantly less in monthly payments or a much shorter final payment date. 

[hughesie27]

44 minutes ago, The Old Tolbooth said:

 

Did you get hit with any rate rises at all before you fixed in? I fixed in October last year for 5 years and I'm hoping that it sorts itself out before it expires. 

Luckily not, we had started the process back in December so everything was signed and agreed by mid Feb.

[jackal]

56 minutes ago, Dean Winchester said:

Probably a good thread to ask.

 

What's the deal with overpayments? I got onto a decent 5 year fixed term last summer when the base rate was low (was a fair bit cheaper for 5 years than what I had been paying on the previous 2 year one) and have been able to overpay 10% last year, this year and should be able to do the same for the next 4 years but I don't think overpayments reduce my term so what happens at the end of my fixed term? Do I need to remortgage to reduce the term? As I assume my monthly cost would drastically fall and I'd get hit with overpayment charges if I kept paying the same amount.

I had a Nationwide mortgage and you could overpay 10% of the total mortgage every year. You had the option to reduce your monthly payment or term with every £500 you overpaid. I believe its best to reduce the term over the payments as you pay your mortgage sooner so pay less interest overall.

 

If its a Nationwide mortgage you can go onto your account and in the overpayments section it gives you the option to reduce term or payment. Sure its set to reduce payment (means you have the mortgage longer so suits them) and takes a few days to kick in. You also have the option to borrow back any overpayment if you still have the mortgage with them, so with poor interest rates for savings it may be better to overpay mortgage so reducing mortgage interest but know you can still get it back if you need it.

[Jeff]

My fixed rate runs out in March next year. Do you think it's worth contacting the provider now?

[Dazo]

37 minutes ago, Jeff said:

My fixed rate runs out in March next year. Do you think it's worth contacting the provider now?

Depends on your early repayment charge. Everything suggests your mortgage payments in March will be far higher than you currently pay. They will likely go up now anyway if you try to fix again now but you are gambling against future hefty raises. It’s gamble how long to fix for also as some experts suggest a 3% plateau before dropping again into 2024. 

[Irufushi]

I was on a rate of 1.6% or

something silly (2 years). Due a renewal in September and have got  got 5 years at 3.4% 

[Jeff]

22 minutes ago, Dazo said:

Depends on your early repayment charge. Everything suggests your mortgage payments in March will be far higher than you currently pay. They will likely go up now anyway if you try to fix again now but you are gambling against future hefty raises. It’s gamble how long to fix for also as some experts suggest a 3% plateau before dropping again into 2024. 

 

I'm at 2.47% as it stands so 3% for another 2 year term wouldn't be too bad I suppose 

[Dazo]

7 minutes ago, Jeff said:

 

I'm at 2.47% as it stands so 3% for another 2 year term wouldn't be too bad I suppose 

You’ll be lucky to get 3% now. Depending on your LTV and your willingness to pay a booking fee likely be nearer 3.5 to 4 %

[The Old Tolbooth]

1 hour ago, Jeff said:

My fixed rate runs out in March next year. Do you think it's worth contacting the provider now?

You’ll have 1% early repayment charges of your current balance, so it’s up to yourself mate, but check the small print on your mortgage deal as there’s one or two out there who are higher than 1% in the last year, although not many to be fair. 

[The Old Tolbooth]

2 hours ago, hughesie27 said:

Luckily not, we had started the process back in December so everything was signed and agreed by mid Feb.

Ah that’s good mate, the rate would be locked in at date of application. 👍

[Dazo]

4 minutes ago, The Old Tolbooth said:

Ah that’s good mate, the rate would be locked in at date of application. 👍

Date of offer isn’t it ? 

[The Old Tolbooth]

3 hours ago, Dean Winchester said:

Probably a good thread to ask.

 

What's the deal with overpayments? I got onto a decent 5 year fixed term last summer when the base rate was low (was a fair bit cheaper for 5 years than what I had been paying on the previous 2 year one) and have been able to overpay 10% last year, this year and should be able to do the same for the next 4 years but I don't think overpayments reduce my term so what happens at the end of my fixed term? Do I need to remortgage to reduce the term? As I assume my monthly cost would drastically fall and I'd get hit with overpayment charges if I kept paying the same amount.

Your over payments bring down the term at the end of the loan and save you a lot in interest payments, for example, if you overpay by £100pm, then this may bring down your overall term from your initial 25 years (or whatever it was), to say 22 years and 7 months, and save you interest in the long term, because that would be 29 months you wouldn’t be paying interest on your loan. 
 

you do not need to re-mortgage to reduce the term as it does this automatically for you, as long as you stay with the same lender. If you move to a new lender with your re-mortgage, then you need to possibly adjust the term to suit yourself. 
 

You can also build up a reserve fund with over payments also, some lenders will let you do this (check with your lender). This means that if you over pay by £100pm for 3 years, then your reserve fund will be £3,600, and you can take this back at any time if you need it for a big project etc, or even a holiday of a lifetime, I’ve seen many reasons for it. 
 

Hope that helps mate 

[The Old Tolbooth]

4 minutes ago, Dazo said:

Date of offer isn’t it ? 

No, date of application, when I apply for someone’s mortgage the deal is locked in, that’s why I had a panic yesterday as I had an HSBC case to put through before they changed their rates this morning, as long as the application is submitted to the lender, then the rate is locked in, even if it takes a further 8 weeks to produce an offer and the rates have risen twice since then, that rate from 8 weeks previous is locked in. 

[Jeff]

Never really thought about overpaying... Guess it's never too late

[Dean Winchester]

40 minutes ago, The Old Tolbooth said:

Your over payments bring down the term at the end of the loan and save you a lot in interest payments, for example, if you overpay by £100pm, then this may bring down your overall term from your initial 25 years (or whatever it was), to say 22 years and 7 months, and save you interest in the long term, because that would be 29 months you wouldn’t be paying interest on your loan. 
 

you do not need to re-mortgage to reduce the term as it does this automatically for you, as long as you stay with the same lender. If you move to a new lender with your re-mortgage, then you need to possibly adjust the term to suit yourself. 
 

You can also build up a reserve fund with over payments also, some lenders will let you do this (check with your lender). This means that if you over pay by £100pm for 3 years, then your reserve fund will be £3,600, and you can take this back at any time if you need it for a big project etc, or even a holiday of a lifetime, I’ve seen many reasons for it. 
 

Hope that helps mate 

Yeah doesn't appear to. Their site says: 

 

If you’ve got a Halifax mortgage, overpayments won’t automatically reduce your mortgage term or your monthly mortgage payment, but could save you money by reducing the amount of interest charged. When the next monthly payment recalculation happens, for example at an interest rate change, the monthly payment will be calculated using the existing remaining term of the mortgage. If you want to reduce your term you will need to speak to one of our mortgage advisers to discuss your options. 

[The Old Tolbooth]

5 minutes ago, Dean Winchester said:

Yeah doesn't appear to. Their site says: 

 

If you’ve got a Halifax mortgage, overpayments won’t automatically reduce your mortgage term or your monthly mortgage payment, but could save you money by reducing the amount of interest charged. When the next monthly payment recalculation happens, for example at an interest rate change, the monthly payment will be calculated using the existing remaining term of the mortgage. If you want to reduce your term you will need to speak to one of our mortgage advisers to discuss your options. 

Remind me tomorrow to give you an example of what it does for you mate 👍

[Jambo 4 Ever]

What’s the average cost of moving houser these days when you already have a mortgage?

 

ie - how much are the legal fees, home report fees etc?

[jambo89]

On 24/06/2022 at 20:34, VALDOS' said:

Cheers for all the advice, I kind of figured this would be the case, but did wonder if you could get a separate mortgage valuation done to bump it up a little.

Anyway, it definitely looks as though I'll need to go 10-15k over the home report value, I've missed out on a few now by only going 5 or 6k over.

It’s usually 10-15% over the home report (West Lothian is around 10-20%) so for a £200,000 house, you probably need to offer around £220,000 to be in with a chance. 
 

11 hours ago, Irufushi said:

I was on a rate of 1.6% or

something silly (2 years). Due a renewal in September and have got  got 5 years at 3.4% 

I took a 10 year fixed rate at 1.89% with the TSB. We need to move house though and are doing so today (hopefully get the keys) so had to switch mortgages and have a new 5 year fixed rate at 2.69%. Gutted I have to get rid of that deal, but need must. 
 

8 hours ago, Jambo 4 Ever said:

What’s the average cost of moving houser these days when you already have a mortgage?

 

ie - how much are the legal fees, home report fees etc?

 

My early exit fee was £3,500

 

my home report was free with the new lender I went with. 
 

my legal fees are £10,300, but that includes additional dwelling supplement at the higher rate of stamp duty. The legal fees which should include the stamp duty) will depend on the price of the house you are purchasing. The actually legal fees from the solicitor will only be £1200 or so (buying only though)

[Dazo]

11 hours ago, The Old Tolbooth said:

No, date of application, when I apply for someone’s mortgage the deal is locked in, that’s why I had a panic yesterday as I had an HSBC case to put through before they changed their rates this morning, as long as the application is submitted to the lender, then the rate is locked in, even if it takes a further 8 weeks to produce an offer and the rates have risen twice since then, that rate from 8 weeks previous is locked in. 

There you go didn’t think that was the case especially if a booking fee wasn’t paid at the time of application. Maybe different with different lenders ? 

[PortyJambo]

2 hours ago, jambo89 said:

It’s usually 10-15% over the home report (West Lothian is around 10-20%) so for a £200,000 house, you probably need to offer around £220,000 to be in with a chance. 

We're in the midst of looking for a new house at the moment, and for the last one that we put an offer in for, we bid £40k over the home report, which was about 20%, and didn't get it. Have seen quite a few that are in very good condition go for 25-30% over the home report value. The houses we've missed out on have all gone to cash buyers.

 

Market has been crazy for a while, but think it will slow down soon with the rates going up and the cost of living starting to bite.

2 hours ago, jambo89 said:

My early exit fee was £3,500

 

my home report was free with the new lender I went with. 
 

my legal fees are £10,300, but that includes additional dwelling supplement at the higher rate of stamp duty. The legal fees which should include the stamp duty) will depend on the price of the house you are purchasing. The actually legal fees from the solicitor will only be £1200 or so (buying only though)

Yeah, we got an example quote from our solicitor (based on paying £300k for a house) on what our fees are likely to be, and it was around that £10k mark as well. Most of it made up of stamp duty as you say, so heavily dependent on the price of the house we buy.

[The Old Tolbooth]

2 hours ago, Dazo said:

There you go didn’t think that was the case especially if a booking fee wasn’t paid at the time of application. Maybe different with different lenders ? 

 

No, all lenders that I know of work the same way with this, as long as the application is in to them before the cut off point, then the rate is secured, whether the booking fee is paid or not, because some booking fees get added to the loan, some get taken at the end of the conveyancing transaction, and others get paid up front, whatever the customer prefers to do. I always advise them to pay it up front to avoid paying interest on it over the term if possible though. 

[Dazo]

1 minute ago, The Old Tolbooth said:

 

No, all lenders that I know of work the same way with this, as long as the application is in to them before the cut off point, then the rate is secured, whether the booking fee is paid or not, because some booking fees get added to the loan, some get taken at the end of the conveyancing transaction, and others get paid up front, whatever the customer prefers to do. I always advise them to pay it up front to avoid paying interest on it over the term if possible though. 

👍

[The Old Tolbooth]

11 hours ago, Jambo 4 Ever said:

What’s the average cost of moving houser these days when you already have a mortgage?

 

ie - how much are the legal fees, home report fees etc?

 

I'd shop around for the Home Report as there's a lot of competition out there right now, but you could expect to typically pay £400-600 for this. 

 

Legal fees I always tell folk to budget for around £1,500, but it depends really again on who you use, some offer slightly better rates than others, but there's not much wriggle room there. It's a misplaced conception that folk think solicitors are "at it" when it comes to conveyancing work, but they're really not, they have a set outlay they need to pay upfront to get your legal work done, usually ranging from £800 to £1,200, and then their fees for carrying out the service on top, they're qualified people, and I think sometimes people lose sight of this. 

 

There's also LBTT on top (or Stamp Duty in old money), make sure you check for this as well as you don't want to get caught out, and for second homes there's a minimum 4% charge now too. 

[The Old Tolbooth]

11 hours ago, Jambo 4 Ever said:

What’s the average cost of moving houser these days when you already have a mortgage?

 

ie - how much are the legal fees, home report fees etc?

 

I forgot to mention, that if you're still in a fixed rate with penalties and you're tied in, then your mortgage is more than likely portable, which means you can take it with you when you move house, as long as the new mortgage is equal to or greater than the old mortgage, then there will be no penalties for this. 

[The Old Tolbooth]

12 hours ago, Dean Winchester said:

Yeah doesn't appear to. Their site says: 

 

If you’ve got a Halifax mortgage, overpayments won’t automatically reduce your mortgage term or your monthly mortgage payment, but could save you money by reducing the amount of interest charged. When the next monthly payment recalculation happens, for example at an interest rate change, the monthly payment will be calculated using the existing remaining term of the mortgage. If you want to reduce your term you will need to speak to one of our mortgage advisers to discuss your options. 

 

I've done a rough estimation on a £200k mortgage over 25 years for you, paying just £100 per month in over payments, this is what it does for you, the £16k saving of interest is massive for people. 

 

Hope that helps 👍