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.

Interested Observer

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

Interested Observer

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

Interested Observer 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.

Interested Observer

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

Interested Observer 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.