Remortgaging when your house value has increased

fa-homebuyers ["Mortgages Explained"]
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If your house value has increased, you may find that more deals are available to you if you remortgage. This is because your loan to value ratio affects the deals that you are eligible for.

How does remortgaging work?

Remortgaging means getting a new deal with a new mortgage lender. You might do this when your current deal has run out.

When your current deal ends, you can either:
Remortgage to a new lender
Get a new deal with your current lender (called a product transfer)
Do nothing and go onto a standard variable rate.
If you remortgage during your deal, you may need to pay an early repayment charge. These can be very expensive and mean you don’t stand to save money by switching lenders.

How does house value affect remortgaging or product transfer?

A mortgage deal will have a maximum loan to value ratio. Loan to value ratio (LTV) is the size of the mortgage you take out compared to the value of the home you want to buy, shown as a percentage.

Rising house value can mean a lower LTV ratio

When the price of your home goes up, it can mean that your LTV increases.
For example:
If you buy a house for £200,000 with a 10% deposit (£20,000), your LTV will be 90%
If the value of your home rose to £220,000 and you’d paid off £10,000 over the course of your deal, your LTV is now 77%

Why has your LTV become lower?

Your LTV has gotten better because you’ve paid off more of your mortgage
It’s also improved because your home is now worth £20,000 more than you borrowed from a lender.
So, the more your house is worth, the better LTV could be. This means you may be eligible for a wider range of mortgage deals.

What does a lower LTV mean?

A lower LTV can mean that you’re able to apply for a deal with a better interest rate. 
It can mean that more deals are available to you.
This is the same whether you’re remortgaging or getting a new deal with the same lender.

How to find out if your house value has increased

Contact an estate agent or surveyor who can give you an estimate of your property’s value. While there are free online tools that can estimate, they are not as precise.

You can also look at house prices in the local area to see how prices are changing.

When you remortgage, or get a deal with your current lender, they may need to carry out a valuation on your home. You may need to pay for this, or a lender may offer to value your home for free. 
The content on this page is for reference and is not financial advice.
For impartial financial advice, try MoneyHelper.