LoanToValue, switch mortgage quick?

patrickolee

Was browsing last night and came across a mortgage switching site. Won't mention the name, but I'm sure theres loads of them. Plugged in numbers which I think are about right to my situation, but given the current market its very hard to know what an accurate valuation of the house is. So I just took about average of the asking prices for similar houses in the area. It gave me 77% loan to value, which means we could qualify for a lower rate with BOSI and would save around 80 a month on repayments. Or, as I would probably do, keep the same payments and reduce the term of the mortgage by about 3 years!

Questions are

1. Is now a good time to switch, given the falling market, it might be harder to get a good loan to value later?
2. Are there consequences, if having secured a mortgage on a given LTV, the value drops? Will they increase the rate?
3. Are there any other disadvantages or pitfalls?

Kipperhell

When I reckoned our house was the highest value I switched. It turned out I was right so our house is probably of a lesser market rate now. Our rate did not change as a result of resent drops there is no clause for another revalue.

Personally it worked out for us and if you believe market values will continue to drop it is best to do it now in order to have a good loan to value ratio.

No problems with it here and it has saved us money and should continue to do so.

The_Conductor

Patrickolee- I do not think that the average of current asking prices in your area is a fair or representative idea of what your house value really is. In most cases properties are simply not shifting at the moment- and as Publius Sirus once said "Everything is worth what its purchaser is willing to pay for it". If you took an average of asking prices in the area and arbitrarily reduced this by 15% you would probably in the right ballpark.

Given interest rate developments today- there will be additional pressure on the ECB to reduce interest rates shortly- despite their inflation busting mandate. I wouldn't panic about switching mortgage if I were you- I'd keep my powder dry, as I reckon there may very well be welcome developments on the immediate horizon for mortgage payers.

patrickolee

Thanks Kipper, hoped that was the case.

Smmcarrick - you mean drop in interest rates? If so, I agree with you, it'd be a tracker I'd go for. About the asking price, I agree too, but according to the guy who rang me back from the site, it doesn't matter as we wouldnt want to sell, just a valuation for the bank, so they might be more generous! Fingers crossed.

MortgageMan

As you can see from my login I am a mortgage broker.

Provided that you keep your loan to value at 80%, there is a tracker home loan rate of 4.6% available at the moment. That is a .6% tracker.

The bank will pay € 750 towards your legal costs providing that you are not an existing customer.

A good broker can advise you of options and offer best house insurance and mortgage protection insurance rates.

Hope this helps.

patrickolee

Who's the 4.6 with? BOSI?

I switched to a LTV tracker and had no problems, just paying a lower interest rate!
The bank will appoint a valuer to come out and value the property.

smccarrick, TBH I couldn't give a fiddlers what the bank believes the value of my house to be.
It was re-valued solely for the purpose of getting that lower LTV rate. I'm not selling and wouldn't expect it to sell for what it's been valued at right now. If they want to believe it's worth 435,000, that's fine by me!

sweetie

I switched my AIB mortgage to tracker when my LTV went to 50% and the bank made me pay for the valuation. Is that usual practice?

Kipperhell

sweetie wrote: »

I switched my AIB mortgage to tracker when my LTV went to 50% and the bank made me pay for the valuation. Is that usual practice?

We got it free from an estate agent and we were already with the bank.

patrickolee

Well, I did it... AIB just wrote back to me to tell me my new payments. 60 a month less than they were! Didnt' bother switching to BOSI, too much hassle getting all the paper work together (I'm self employed). I'll increase the payments later to reduce the term. Valuation cost 100Euro, could have got it refunded if I reapplied for the mortgage, as the estate agent is an agent for them, but that would have meant paper work again. No legal costs.

Whole thing was very little hassle and well worth doing. Thanks for the replies

The_Conductor

Nice one Patrick- with feedback like that maybe a few more people might get over their resistance to switching. EUR60 a month might not be a massive amount- but it adds up rapidly. Nice one!