Loan to value

budhabob

Hi All,

We bought our house 2 years ago, have done a good bit of work to it thereby adding value, all the while the market is going mad.

Someone mentioned to me the potential of getting the house revalued thereby improving our LTV rate resulting in reduced payments.

As background, house is in Dublin, mortgage is with Haven, variable rate.

Just wondering if this is a genuine option as the person couldn't give me anything other than vague statements.

Thanks in advance.

Danbo!

Not sure on Haven, but some banks do offer it.

I know PTSB have a managed variable rate. You pay for a valuation (about 150 quid) and send it in with a form and they can adjust your interest rate.

I'm in the process of moving mortgage provider to get an even lower rate again, might be worth your while depending on rate. Its a bit of work to move, but most offer cash back or cover legal fees. Had the valuation done for it and our LTV has dropped from 85% to 67%, even though we're only 3 years in and about 12k has been paid off the principal.

budhabob

Danbo! wrote: »

Not sure on Haven, but some banks do offer it.

I know PTSB have a managed variable rate. You pay for a valuation (about 150 quid) and send it in with a form and they can adjust your interest rate.

I'm in the process of moving mortgage provider to get an even lower rate again, might be worth your while depending on rate. Its a bit of work to move, but most offer cash back or cover legal fees. Had the valuation done for it and our LTV has dropped from 85% to 67%, even though we're only 3 years in and about 12k has been paid off the principal.

Thanks so much. And not to pry too much, but are the savings significant?

Danbo!

budhabob wrote: »

Thanks so much. And not to pry too much, but are the savings significant?

Yes, very. Though I'm on a high variable rate right now, 4.2% moving to 2.95%. Have the choice of keeping it at same term (32yrs remain) and save €215 per month (:eek:) or keep paying the same monthly amount which would reduce the term by 8 years. I'm leaning towards keeping the term as a safety buffer, but overpay the €215 per month.

budhabob

Danbo! wrote: »

Yes, very. Though I'm on a high variable rate right now, 4.2% moving to 2.95%. Have the choice of keeping it at same term (32yrs remain) and save €215 per month (:eek:) or keep paying the same monthly amount which would reduce the term by 8 years. I'm leaning towards keeping the term as a safety buffer, but overpay the €215 per month.

Jaysus....!!!!! Its something I meant to look into, but we've been doing a lot of the work on the house ourselves, so only kind of looking into it now. That's certainly not to be sniffed at.

KCross

budhabob wrote: »

Someone mentioned to me the potential of getting the house revalued thereby improving our LTV rate resulting in reduced payments.

As background, house is in Dublin, mortgage is with Haven, variable rate.

Yes, this is very common.

Usually banks offer different variable rates based on LTV (<50%, 50-80%, >80%).

If you took the mortgage out with an LTV of >80% and the improvements and the rise in the market has now taken you into the 50-80% LTV you will get a reduction in your rate.

They might initially say no but all you have to say is that you will move your mortgage to another bank and they will quickly change their tune. I've done it twice so far.

However, if you are already in the 50-80% LTV and the increase in value still puts you into the 50-80 bracket you gain nothing. They will also usually insist on you using their approved valuers and not the "guy down the pub"!

Danbo!

budhabob wrote: »

Jaysus....!!!!! Its something I meant to look into, but we've been doing a lot of the work on the house ourselves, so only kind of looking into it now. That's certainly not to be sniffed at.

Definitely worth it. In same boat, did lots of small things around the house and a couple of significant things too. Had been putting it off for ages, now I'm rushing it through once I heard the potential savings.

FWIW, we're moving to AIB and the 2.95 rate is for LTV of 50-80%, which is quite wide open. We only needed the value of the house to increase about €8k over the last 3 years to make it into that range, and the work we had done likely covered that increase, let alone the market increase.

The Mulk

budhabob wrote: »

Jaysus....!!!!! Its something I meant to look into, but we've been doing a lot of the work on the house ourselves, so only kind of looking into it now. That's certainly not to be sniffed at.

Legal fees work out about €1000. BOI ask to see about €3k in a savings account to cover switching before you switch to cover fees etc.
If you go fixed some banks won't let you overpay every month so check that out.

Danbo!

The Mulk wrote: »

Legal fees work out about €1000. BOI ask to see about €3k in a savings account to cover switching before you switch to cover fees etc.
If you go fixed some banks won't let you overpay every month so check that out.

Yep should have said that too. AIB are offering €2k cash back, but you'll need to front the legal fees as the cash back is deposited 2 months after drawdown

Staph

Can I ask how long you were into your mortgage before you asked to change into the lower LTV bracket? We're only in a year of a 30 year mortgage. But with price increases on our street and the upgrades we did, I think we could move into a better LTV rate.

dont bother

so, what happens here - i did a check, only online (based on a "valuation" of the price of the same exact apartment as mine on Daft)

so when i checked the LTV on my apartment, it's as low as 35% i'm getting.

what would that mean for me? it is not because of "works" put in, well nothing significant, new floors etc but that's all. it's because of the higher prices of property and the fact i put in 50K deposit when i bought. the mortgage is worth 120K now and the apartment value 350K....

i;m on variable with AIB... what does it mean for me?

TheShow

If you're on a fixed rate you wont be able to change anything until the foxed rate term expires.
If you're on a variable rate, then you should be able to save a few quid. Might be worth looking into refinancing the mortgage altogether with another lender.

dont bother

dont bother wrote: »

so, what happens here - i did a check, only online (based on a "valuation" of the price of the same exact apartment as mine on Daft)

so when i checked the LTV on my apartment, it's as low as 35% i'm getting.

what would that mean for me? it is not because of "works" put in, well nothing significant, new floors etc but that's all. it's because of the higher prices of property and the fact i put in 50K deposit when i bought. the mortgage is worth 120K now and the apartment value 350K....

i;m on variable with AIB... what does it mean for me?

According to the AIB website their variable interest rate for LTV <= 50% is 2.75%.

So I guess if you're not on that rate you should talk to them. If you are on that rate then go look at other banks to see if they're doing better.

KCross

dont bother wrote: »

so, what happens here - i did a check, only online (based on a "valuation" of the price of the same exact apartment as mine on Daft)

so when i checked the LTV on my apartment, it's as low as 35% i'm getting.

what would that mean for me? it is not because of "works" put in, well nothing significant, new floors etc but that's all. it's because of the higher prices of property and the fact i put in 50K deposit when i bought. the mortgage is worth 120K now and the apartment value 350K....

i;m on variable with AIB... what does it mean for me?

What interest rate are you paying? Check your online statement. It gives the current rate you are paying.

AIB's rates are here
https://aib.ie/our-products/mortgages/mortgage-interest-rates

If you were in the 50-80 bracket when you took out the mortgage and you now fit into the <50% bracket you would get an additional 0.2% reduction from AIB on foot of a valuation to prove the new LTV.

The Mulk

Staph wrote: »

Can I ask how long you were into your mortgage before you asked to change into the lower LTV bracket? We're only in a year of a 30 year mortgage. But with price increases on our street and the upgrades we did, I think we could move into a better LTV rate.

Once you're on a variable rate you can switch after 1 year I think.I've been given the go ahead by PTSB to switch after 1 year due to better rates elsewhere. I don't have to repay the 2% cashback either

PhoenixParker

Staph wrote: »

Can I ask how long you were into your mortgage before you asked to change into the lower LTV bracket? We're only in a year of a 30 year mortgage. But with price increases on our street and the upgrades we did, I think we could move into a better LTV rate.

We're with kbc and started on a variable.
Bought a new build so sale agreed December, moved in in July, revalued to get below 80% that December.

Idioteque

Been looking into this also - only problem I'm seeing is that the threat to leave doesn't really hold up as AIB are already by far the best variable rate in the >80% bracket..will still give it a go mind you

iluvfatfrogs

This is a very good thread - how about my situation:
Mortgage LTV (based on purchase price) was exactly 80% (i.e. 20% deposit).
However, based on the banks valuation at the time of drawdown, the LTV was actually 73%.
I'm presuming my fixed interest rate was calculated on 80%+ as opposed to 50-80%?

Would it be worth me looking into breaking the fixed term (at a cost obv) to secure the lower rate related to 50-80%, especially as there has only been 12 months payments against the principal, so any drop is significant?

Truckermal

I am moving from Ulster Bank to PTSB, I will be paying €150 extra per month but shortening my term by 7 years plus I'm availing of the cashback!

@OP if you are getting your house valued make sure they are approved by your bank as they only nominate certain property auctioneers.

KCross

Idioteque wrote: »

Been looking into this also - only problem I'm seeing is that the threat to leave doesn't really hold up as AIB are already by far the best variable rate in the >80% bracket..will still give it a go mind you

That depends. If you are on the 80%+ rate with AIB now and your mortgage is now in the 50-80% range a competitor might have a better rate than AIB's 80%+ rate?

Every lender has these rates published on their website. AIB are the cheapest, from what I can see.

But you are right, if you are with AIB and they offer the best rate already they have no reason to offer you a better one!

iluvfatfrogs wrote: »

This is a very good thread - how about my situation:
Mortgage LTV (based on purchase price) was exactly 80% (i.e. 20% deposit).
However, based on the banks valuation at the time of drawdown, the LTV was actually 73%.
I'm presuming my fixed interest rate was calculated on 80%+ as opposed to 50-80%?

Would it be worth me looking into breaking the fixed term (at a cost obv) to secure the lower rate related to 50-80%, especially as there has only been 12 months payments against the principal, so any drop is significant?

Usually high penalties for breaking a fixed rate. You would need to read the fine print of your contract on that. How long did you fix for? However long it is, look at switching then based on a 50-80% LTV rate.

L1011

BOI moved me from the >80 to the <50 range without a revaluation - had dropped to the 50-80 range just on repayment alone even if the value hadn't increased though so it wasn't as big a jump as some. Down to about 30% now

KCross

KCross wrote: »

Usually high penalties for breaking a fixed rate. You would need to read the fine print of your contract on that. How long did you fix for? However long it is, look at switching then based on a 50-80% LTV rate.

There can be but not necessarily. A friend is doing it at the moment with KBC and the charge is under €300. If you're moving to a better rate you'll make that back in no time through reduced payments, so well worth talking to the bank anyway.

budhabob

Some cracking information in this thread, cheers folks. Definitely going to start looking into this, probably in the new year though. Thanks folks.

iluvfatfrogs

Eva Loose Stretcher wrote: »

There can be but not necessarily. A friend is doing it at the moment with KBC and the charge is under €300. If you're moving to a better rate you'll make that back in no time through reduced payments, so well worth talking to the bank anyway.

Yes, I've contacted the bank about ten days but no response yet - will have dig out the fine print.

Numbers wise I'm locked into fixed rate interest of 3.65% for 20 months.
If I got a rate of 2.95% (with same bank) for those 20 months, would equal savings of approx €2,556.

So it would have to be an extortionate release fee not to make financial sense.

commited

Folks, how long do you need to have your mortgage with current provider before switching?

Danbo!

commited wrote: »

Folks, how long do you need to have your mortgage with current provider before switching?

Obviously cant speak for each specific bank contract, but in theory there is no waiting limit to change. There may be fees for moving during a fixed term (although the above shows the fee is generally much less than the saving anyway), or some banks may have clawbacks for cash back offers.

So contracts aside, you're only limited by the process of moving taking time.

Danbo!

Danbo! wrote: »

or some banks may have clawbacks for cash back offers.

Clawbacks are not allowed as far as I know.

machalla

commited wrote: »

Folks, how long do you need to have your mortgage with current provider before switching?

About 6-12 months from what I've seen on various forums. Some banks may accept it sooner. I remember someone on askaboutmoney claimed they had switched mortgage 3 times in a year to take advantage of cashback deals which can't be clawed back as has been mentioned already.

Askthe EA

Eva Loose Stretcher wrote: »

Clawbacks are not allowed as far as I know.

They're not. But they wont tell you that.

Cape Clear

Rang my current provider AIB on a LTV >80%. Like the OP the value of the property now would be closer to 50%. The first reply I have received from them is that I cannot move bands under the terms of my letter of offer and can only avail of one LTV band for the duration of the loan. Anyone else have similar dealings with AIB?

KCross

Cape Clear wrote: »

Rang my current provider AIB on a LTV >80%. Like the OP the value of the property now would be closer to 50%. The first reply I have received from them is that I cannot move bands under the terms of my letter of offer and can only avail of one LTV band for the duration of the loan. Anyone else have similar dealings with AIB?

Got EXACTLY the same response when I first asked AIB.
I threatened to move mortgage provider and they came back with "ok, just this once!"

However, rates have changed since then. So, the thing is.... are the other providers rates in the 50-80% bracket better or the same as AIB's 80%+ rate?
If there is little or no difference then you don't have anything to gain by moving, bearing in mind AIB are the cheapest anyway so their 80%+ rate might be as good as the others 50-80% rate.

Cape Clear

KCross wrote: »

Got EXACTLY the same response when I first asked AIB.
I threatened to move mortgage provider and they came back with "ok, just this once!"

Out of interest who did you contact?

KCross

Cape Clear wrote: »

Out of interest who did you contact?

Just some randomer in the branch where I originally got the mortgage. They just process the paper work. The decision is made in Dublin.

Looking at the current rates you are probably paying 3.15%. If you can get yourself into the 50-80% bracket you will get that down to 2.95%.

There aren't that many(any?) offering rates better than 3.15% at the moment. TSB are offering fixed new business rates around 3% so you could threaten them with a switch to them. All the others seem to be above the 3.15% rate so you'd have no leverage there.

Ulster Bank have a 3% rate as well for mortgages above 200k with LTV of <60%. You might fit that criteria.

April 73

KBC spontaneously wrote to me last week saying that I should get in touch if I felt my LTV was better than when I took the mortgage out. I will be able to move from the 60% bracket to below 50% I reckon.
Going to pick up the phone now after reading this. I'd just been lazy & hadn't taken any action on it.
First time I've ever seen the bank keen to offer rate reductions!

Truckermal

machalla wrote: »

About 6-12 months from what I've seen on various forums. Some banks may accept it sooner. I remember someone on askaboutmoney claimed they had switched mortgage 3 times in a year to take advantage of cashback deals which can't be clawed back as has been mentioned already.

Does that really work? I'm impressed at the thought though!

Danbo!

Truckermal wrote: »

Does that really work? I'm impressed at the thought though!

No reason it shouldn't. Switching is a bit of work gathering statements for all accounts, passports, salary certs, etc and trips to the bank, but it would actually be easier to switch frequently in close succession and use the same correspondence.

Personally, last thing I want to do after going through the switching process is go through the switch process

CreativeSen

A few questions on this.

We just bought a house and were expecting to pay a 20% deposit. When the moment came that the bank took the funds out of the account they took ever so slightly more than 20%. In real terms it was about 600 EUR but percentage wise it was 20.1%.

1. - is this normal/standard practice?
2. - does that 0.1% increase in the deposit put us into a different rate bracket?

Danbo!

Danbo! wrote: »

No reason it shouldn't. Switching is a bit of work gathering statements for all accounts, passports, salary certs, etc and trips to the bank, but it would actually be easier to switch frequently in close succession and use the same correspondence.

Personally, last thing I want to do after going through the switching process is go through the switch process

It's not just hassle, it's also quite expensive to switch providers, your solicitor has to get involved again etc so there are legal fees and whatever else. So you have to factor that in as well, make sure you're going to save back at least the costs through cashback or reduced interest or else it isn't worth it.

TheShow

CreativeSen wrote: »

A few questions on this.

We just bought a house and were expecting to pay a 20% deposit. When the moment came that the bank took the funds out of the account they took ever so slightly more than 20%. In real terms it was about 600 EUR but percentage wise it was 20.1%.

1. - is this normal/standard practice?
2. - does that 0.1% increase in the deposit put us into a different rate bracket?

Why was the bank taking money out of your account?
You pay the 20% deposit to the vendor of the property via solicitor, not to the bank.
The bank gives you a mortgage for the remaining 80%.

Maybe it was a bank transfer to the solicitor that you are referring to? whch can only be done on your instruction and you should specify the amount. I'd certainly be asking the bank why more funds were taken than you authorised.

iluvfatfrogs

TheShow wrote: »

Why was the bank taking money out of your account?
You pay the 20% deposit to the vendor of the property via solicitor, not to the bank.
The bank gives you a mortgage for the remaining 80%.

Maybe it was a bank transfer to the solicitor that you are referring to? whch can only be done on your instruction and you should specify the amount. I'd certainly be asking the bank why more funds were taken than you authorised.

Was it possibly the actual payment to the solicitor who included their fee (or stamp duty) also?

Danbo!

Eva Loose Stretcher wrote: »

It's not just hassle, it's also quite expensive to switch providers, your solicitor has to get involved again etc so there are legal fees and whatever else. So you have to factor that in as well, make sure you're going to save back at least the costs through cashback or reduced interest or else it isn't worth it.

Its generally solicitors fee + valuation fee. Solicitor is about €1k, valuation €150. Any bank offering cash back deals will usually cover this amount and more:
PTSB 2% (300k mortgage would be 6k cash)
EBS 2%
AIB €2k
KBC €3k
Ulster €1.5k
BOI 2% (+1% in 5 years)

etc.

All the above cover costs in most cases, and you'll have a few quid left for your troubles. In most cases, you need to have the fees yourself as the cash back deals come after mortgage drawdown.

iluvfatfrogs

iluvfatfrogs wrote: »

This is a very good thread - how about my situation:
Mortgage LTV (based on purchase price) was exactly 80% (i.e. 20% deposit).
However, based on the banks valuation at the time of drawdown, the LTV was actually 73%.
I'm presuming my fixed interest rate was calculated on 80%+ as opposed to 50-80%?

Would it be worth me looking into breaking the fixed term (at a cost obv) to secure the lower rate related to 50-80%, especially as there has only been 12 months payments against the principal, so any drop is significant?

Update: €214,000k mortgage balance, 15 months into a 36 month fixed term 3.65% rate, will cost €1,600 to break

Option to select 2.95% variable but I’d only break even over the 21 months period , (assuming rate remains unchanged) or opt to fix for 3-5-7 years at a Lower rate than I’m currently on

Danbo!

iluvfatfrogs wrote: »

Update: €214,000k mortgage balance, 15 months into a 36 month fixed term 3.65% rate, will cost €1,600 to break

Option to select 2.95% variable but I’d only break even over the 21 months period , (assuming rate remains unchanged) or opt to fix for 3-5-7 years at a Lower rate than I’m currently on

Is that with the same bank? Would you consider changing to avail of cash back offers to soften the blow of €1,600?

I’m two weeks into switching process and it’s actually been quite easy, letter of offer has just been sent to solicitor so most hard work done. Even tho I work next door to bank, almost all correspondence has been via email. Did have to visit once to sign forms (also switching current acc and credit card to same bank) so needed wife with me as all will be joint accounts.

retalivity

April 73 wrote: »

KBC spontaneously wrote to me last week saying that I should get in touch if I felt my LTV was better than when I took the mortgage out. I will be able to move from the 60% bracket to below 50% I reckon.
Going to pick up the phone now after reading this. I'd just been lazy & hadn't taken any action on it.
First time I've ever seen the bank keen to offer rate reductions!

I got the same letter from them a few weeks ago, reckon its something to do with the ongoing tracker scandal - keep customers onside.

Bought a year ago, 10% deposit. Got revalued today and ltv is 65%, a combination of some overpayment but mainly crazy dublin prices. Variable rate now going down to 3.1%, paying the same and reducing the term by about 2 yrs

iluvfatfrogs

Danbo! wrote: »

Is that with the same bank? Would you consider changing to avail of cash back offers to soften the blow of €1,600?

I’m two weeks into switching process and it’s actually been quite easy, letter of offer has just been sent to solicitor so most hard work done. Even tho I work next door to bank, almost all correspondence has been via email. Did have to visit once to sign forms (also switching current acc and credit card to same bank) so needed wife with me as all will be joint accounts.

It is with Same bank (AIB), so no cash back applies, not sure if any of the banks with cash back offers have as low as rate? But open to correction on yhat

Danbo!

iluvfatfrogs wrote: »

It is with Same bank (AIB), so no cash back applies, not sure if any of the banks with cash back offers have as low as rate? But open to correction on yhat

Not that I know of. They’re the bank I’m changing to because of the rate

PaulKK

KCross wrote: »

Just some randomer in the branch where I originally got the mortgage. They just process the paper work. The decision is made in Dublin..

Did you just rock into the branch with a new valuation?

I got the same spiel. Coming to the end of 3 year fixed with aib @ 3.8% and I might just nick it under the 50% ltv now. Original loan was taken on ltv > 80% almost 6 years ago and they claim you can only have one ltv rate for the life of the mortgage.

Was there any particular thing you did to get them to change their tune? My original plan was to send in an approval in principle from another lender with the new valuation.

KCross

PaulKK wrote: »

Did you just rock into the branch with a new valuation?

Not quite. I discussed it with them over the phone/email first and they said no, giving the same stock answer of "only one LTV rate for the lifetime of the mortgage"!

I then threatened to move mortgage by saying I had approval. They then relented and gave me their valuation form and a list of approved valuers. I went to one of them and got it filled in. They have to come out and inspect the house and give examples of other houses in the area and what they sold for etc. You have to pay them to fill that form in (€100+)

Send that form in to the branch and they forward to Dublin for approval and that was it.

PaulKK

KCross wrote: »

Not quite. I discussed it with them over the phone/email first and they said no, giving the same stock answer of "only one LTV rate for the lifetime of the mortgage"!

I then threatened to move mortgage by saying I had approval. They then relented and gave me their valuation form and a list of approved valuers. I went to one of them and got it filled in. They have to come out and inspect the house and give examples of other houses in the area and what they sold for etc. You have to pay them to fill that form in (€100+)

Send that form in to the branch and they forward to Dublin for approval and that was it.

Did you have approval? Did you go in to the branch and tell them you were moving or did you do that over the phone?

I've already called them months ago and got the stock answer.

KCross

PaulKK wrote: »

Did you have approval? Did you go in to the branch and tell them you were moving or did you do that over the phone?

I've already called them months ago and got the stock answer.

No, I bluffed! It was done via email & phone. I did quote a specific bank and rate, that they were offering, which was better than AIB so they knew there was a possibility of losing me. You don't have to prove you have approval. Thats a gamble they have to take.


The worst that can happen is they call your bluff and you either have to go away and get approval or you stay with them... you won't be worse off either way.


The thing for you now is, is there a bank out there offering a better rate than what AIB are giving you. If there isn't then you have nothing to bluff with.

What rate are you going onto with AIB when your 3yr fixed rate finishes and is there a 50% LTV rate being offered by another bank that beats that rate?

Teyla Emmagan

PaulKK wrote:

I've already called them months ago and got the stock answer.

Who did you say you were moving to? Because AIB/EBS/Haven are the same business so if you said you would leave Haven for AIB they mightn't be too bothered.