Mortgage term coming to an end
Discussion
In October 2025 our current fixed rate mortgage comes to an end and I want to prepare and learn how remortgaging works. We will be going on another fixed term mortgage. The outstanding balance on the mortgage when the term ends is £141000.
Our current rate is 2.3% so fully expect this to more than double (just the way of it). I believe our home has increased in value by around £20k. When we remortgage will the lender revalue the property ? If it has indeed increased in value will that benefit us ?
So I understand how it works say it had increased by £20k would it mean we would only need to mortgage £121k based on £141k outstanding at the end of the term ?
Just trying to understand how it all works. Any advice/help is much appreciated
Our current rate is 2.3% so fully expect this to more than double (just the way of it). I believe our home has increased in value by around £20k. When we remortgage will the lender revalue the property ? If it has indeed increased in value will that benefit us ?
So I understand how it works say it had increased by £20k would it mean we would only need to mortgage £121k based on £141k outstanding at the end of the term ?
Just trying to understand how it all works. Any advice/help is much appreciated
No
You would still owe the £141,000 even with the increase in house value. As that is the balance owed to the mortgage company.
The increase in value may change your Loan To Value (LTV), this is the percentage you own compared to the value. The better this is, the better your rate, as you are considered less of a risk.
If you stay with your current provider they may not even look at that.
Either way, as you alluded too, rates have increased, so the interest rate will be higher and on the £141,000.
If this is too much of a financial strain, you could look at moving the mortgage over a longer term (more years) this comes with both positives (less cost per month) and negatives (you will pay more in interest).
Good luck, it is a bit of a minefield.
There is however a very good resident mortgage broker on here...... (not me by the way)
You would still owe the £141,000 even with the increase in house value. As that is the balance owed to the mortgage company.
The increase in value may change your Loan To Value (LTV), this is the percentage you own compared to the value. The better this is, the better your rate, as you are considered less of a risk.
If you stay with your current provider they may not even look at that.
Either way, as you alluded too, rates have increased, so the interest rate will be higher and on the £141,000.
If this is too much of a financial strain, you could look at moving the mortgage over a longer term (more years) this comes with both positives (less cost per month) and negatives (you will pay more in interest).
Good luck, it is a bit of a minefield.
There is however a very good resident mortgage broker on here...... (not me by the way)
If it’s the same lender they probably won’t take any increase into account just offer you a new rate.
A new lender will ask you what the value is it would only benefit you if it took you loan to value below say 60% they normally have lower rates for lower LTV as it’s less risky for them.
A new lender will ask you what the value is it would only benefit you if it took you loan to value below say 60% they normally have lower rates for lower LTV as it’s less risky for them.
Harry you Potter said:
So I understand how it works say it had increased by £20k would it mean we would only need to mortgage £121k based on £141k outstanding at the end of the term ?
How much you buy something for doesn't change, even if the value goes up.Your house could be worth £2m but you still needed your £141k (plus whatever you paid off) to buy it in the first place, which you haven't paid back yet. You will only realise that increase in value if you ever sell it.
The increase in value helps you, as others have said, in terms of Loan to Value. Your loan is now smaller relative to the value so you get access to better rates.
Thanks for the advice it has really helped me to understand things more. I have calculated my LTV to be roughly 30% so hopefully that’ll encourage lenders to give me a lower interest rate.
Another question, I was planning on changing jobs next year so might be in employment for less than 6 months at time or remortgage. Would that affect anything ?
Another question, I was planning on changing jobs next year so might be in employment for less than 6 months at time or remortgage. Would that affect anything ?
Harry you Potter said:
Thanks for the advice it has really helped me to understand things more. I have calculated my LTV to be roughly 30% so hopefully that’ll encourage lenders to give me a lower interest rate.
Another question, I was planning on changing jobs next year so might be in employment for less than 6 months at time or remortgage. Would that affect anything ?
Not really, a couple of lenders require 6 months employment history in the current job but in the main you should be fine.Another question, I was planning on changing jobs next year so might be in employment for less than 6 months at time or remortgage. Would that affect anything ?
If your LTV is 30%, you'll be in the lowest LTV category comfortably so your increase in value won't really impact the rates available to you as you are already in the lowest category
Edited by Sarnie on Monday 21st October 20:45
I’m also due a remortgage at that time next year. I’d never thought about possibly better rates for lower LTV. Bought just before the values boom so it’s gone up £150k in value in a few years, absolutely mental. But yeh 40% LTV for me, shall try utilise that. Thanks guys. Good luck on getting a good rate OP.
I used to be a mortgage broker. Retired a few years ago.
Can I strongly recommend contacting a good mortgage broker.
A simple remortgage, seems easy, so many will not bother and will just stick with their existing lender.
The tool a mortgage broker has at his disposal is a sourcing system, and a good broker will have access to a lot of lenders.
Some fixed rates will have a lower interest rate, but will charge a large arrangement fee.
The sourcing system can, for example, put all the 2 year fixed rate deals, in order of “total to pay,” over the 2 year period, and give you a true picture of the best deal. This will include any fees, including legal fees if switching lender.
The Broker can then check you fit that lenders criteria and arrange the transfer for you.
There is no loyalty from banks to you, and there should be no loyalty from you to your lender!
If you feel the payments may be to high, consider extending the term, but with a mortgage that enables you to overpay.( most do.). You can then overpay every month to bring it to your original term, but if you are struggling drop to the lower amount, without having to go cap in hand to your lender.
Hope that makes sense!
I always used to think the lenders were the enemy, cos they are really out to make a profit from you, and it was my job, to make sure they got as little as possible!😁
Can I strongly recommend contacting a good mortgage broker.
A simple remortgage, seems easy, so many will not bother and will just stick with their existing lender.
The tool a mortgage broker has at his disposal is a sourcing system, and a good broker will have access to a lot of lenders.
Some fixed rates will have a lower interest rate, but will charge a large arrangement fee.
The sourcing system can, for example, put all the 2 year fixed rate deals, in order of “total to pay,” over the 2 year period, and give you a true picture of the best deal. This will include any fees, including legal fees if switching lender.
The Broker can then check you fit that lenders criteria and arrange the transfer for you.
There is no loyalty from banks to you, and there should be no loyalty from you to your lender!
If you feel the payments may be to high, consider extending the term, but with a mortgage that enables you to overpay.( most do.). You can then overpay every month to bring it to your original term, but if you are struggling drop to the lower amount, without having to go cap in hand to your lender.
Hope that makes sense!
I always used to think the lenders were the enemy, cos they are really out to make a profit from you, and it was my job, to make sure they got as little as possible!😁
60% LTV is usually the threshold for the better rates. For planning purposes you could just do some basic quotes now on online tools, just to see what the damage is going to be. (Rates could clearly rise or fall in the next 12 months).
Understand the effect of the setup fees Vs the rate. I always consider the overall cost of the initial term. Just because a product has a super low Apr, it's setup fee may mean the product is more expensive overall.
If you live in a new build with management fees, you may have to pay for a management pack/legals, which can cost in excess of £500 - another consideration.
If you do a product transfer (stay with the same mortgage provider, you will not have to pay the above)
I once had a mortgage advisor, advising a product that was not the cheapest over the initial term. It was the cheapest over the life of the whole mortgage, I had to explain I intended on remortgaging at the end of the initial term and not sitting on the svr for the remaining life of the mortgage.
Understand the effect of the setup fees Vs the rate. I always consider the overall cost of the initial term. Just because a product has a super low Apr, it's setup fee may mean the product is more expensive overall.
If you live in a new build with management fees, you may have to pay for a management pack/legals, which can cost in excess of £500 - another consideration.
If you do a product transfer (stay with the same mortgage provider, you will not have to pay the above)
I once had a mortgage advisor, advising a product that was not the cheapest over the initial term. It was the cheapest over the life of the whole mortgage, I had to explain I intended on remortgaging at the end of the initial term and not sitting on the svr for the remaining life of the mortgage.
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