The Mortgage Clinic: 'I need to remortgage – but have no equity'


'I bought my first flat in 2006 and took out a two-year fix for 5.9 per cent, as it was a near-100 per cent loan with Northern Rock. I need to remortgage and have barely any equity in my property; my loan-to-value is still 97 per cent. Where am I going to get a mortgage? Do I have any choice other than to go on to Northern Rock's SVR?'
HR, Newcastle

This isn't a pretty situation, and you won't be alone: thousands of first-time buyers who took advantage of cheaper credit and rather more accommodating lenders back in 2006 face a similar struggle. However, there may be a way out, depending on your circumstances.

First, secure an accurate valuation of your flat; it may surprise you, says Melanie Bien of the broker Savills Private Finance. "I'd have expected it to have increased in value over two years, unless it was a new-build flat." Ask local estate agents, and use property price calculators such as Nationwide's ( www.nationwide.co.uk/hpi). Alternatively, if you're using a broker to find a mortgage, see if it will instruct a valuation for you (you may have to pay extra for this).

Don't forget, adds Richard Morea at the broker London & Country, that your last two years of repayment can make a difference. "If you have taken a repayment mortgage then you should also check the outstanding balance, as you may have paid off more than you think."

If you're lucky, then, your actual LTV will stand at 95 per cent – the maximum that lenders are currently prepared to lend – and open the door to an affordable remortgage. "At this level, you'll be able to shop around for a lower rate – Bank of Ireland, Halifax and RBS will all do a deal at 95 per cent LTV," Ms Bien says. Skipton building society will also lend at 95 per cent LTV mortgage, according to Moneyfacts, the financial analysts, at a rate of 5.79 per cent plus a £799 fee. The Yorkshire bank offers a variable rate deal at 6.19 per cent with a £599 fee. These aren't cheap, but will save you a fortune compared to slipping on to Northern Rock's SVR, which currently hovers at an eye-watering 7.49 per cent, "a rate that could increase at any time," warns Andrew Montlake at the broker Cobalt Capital.

If your flat's valuation is above 95 per cent, then you may, sadly, have little choice. "It's worth asking Northern Rock whether they have any alternative options to their SVR for you," says Mr Morea, but your high LTV makes this unlikely. The nationalised bank is more interested in reducing its mortgage debts than extending them. It might be a long shot, Ms Bien adds, but if you've any savings then you could use these to pay down your mortgage – and reach the magic 95 per cent LTV figure.

Send us your questions and you could receive £50 to spend at Amazon

Foxed by jargon? Worried by the credit crunch? Email a question to mortgageclinic@independent.co.uk. We will not reveal your identity, and we cannot give specific advice. If your question is printed, you'll receive a £50 voucher from Amazon.co.uk, so you can kit out your home with anything from a lawnmower to an espresso machine. www.amazon.co.uk/homeandgarden

PROMOTED VIDEO
News
Alan Bennett criticised the lack of fairness in British society encapsulated by the private school system
peopleBut he does like Stewart Lee
Sport
John Terry, Frank Lampard
footballChelsea captain sends signed shirt to fan whose mum had died
Life and Style
food + drink
Arts and Entertainment
Rita Ora will replace Kylie Minogue as a judge on The Voice 2015
tv
Life and Style
tech
Life and Style
Alan Turing, who was convicted of gross indecency in 1952, was granted a royal pardon last year
life
Arts and Entertainment
Sheridan Smith as Cilla Black and Ed Stoppard as her manager Brian Epstein
tvCilla Episode 2 review: Grit under the glamour in part two of biopic series starring Sheridan Smith
Life and Style
life
Arts and Entertainment
Tennis player Andy Murray's mum Judy has been paired with Anton du Beke for Strictly Come Dancing. 'I'm absolutely delighted,' she said.
tvJudy Murray 'struggling' to let Anton Du Beke take control on Strictly
Life and Style
Vote with your wallet: the app can help shoppers feel more informed about items on sale
lifeNew app reveals political leanings of food companies
Sport
David Moyes and Louis van Gaal
football
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    IT Project manager - Web E-commerce

    £65000 Per Annum Benefits + bonus: Clearwater People Solutions Ltd: If you are...

    Trainee / Experienced Recruitment Consultants

    £20000 - £25000 per annum + OTE £40,000: SThree: SThree are a global FTSE 250 ...

    Trainee Recruitment Consultant - Soho

    £20000 - £25000 per annum + OTE £40000: SThree: As a Recruitment Consultant, y...

    Trainee Recruitment Consultants - Banking & Finance

    £20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

    Day In a Page

    Secret politics of the weekly shop

    The politics of the weekly shop

    New app reveals political leanings of food companies
    Beam me up, Scottie!

    Beam me up, Scottie!

    Celebrity Trekkies from Alex Salmond to Barack Obama
    Beware Wet Paint: The ICA's latest ambitious exhibition

    Beware Wet Paint

    The ICA's latest ambitious exhibition
    Pink Floyd have produced some of rock's greatest ever album covers

    Pink Floyd have produced some of rock's greatest ever album covers

    Can 'The Endless River' carry on the tradition?
    Sanctuary for the suicidal

    Sanctuary for the suicidal

    One mother's story of how London charity Maytree helped her son with his depression
    A roller-coaster tale from the 'voice of a generation'

    Not That Kind of Girl:

    A roller-coaster tale from 'voice of a generation' Lena Dunham
    London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

    London is not bedlam or a cradle of vice

    In fact it, as much as anywhere, deserves independence
    Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

    Vivienne Westwood 'didn’t want' relationship with McLaren

    Designer 'felt pressured' into going out with Sex Pistols manager
    Jourdan Dunn: Model mother

    Model mother

    Jordan Dunn became one of the best-paid models in the world
    Apple still coolest brand – despite U2 PR disaster

    Apple still the coolest brand

    Despite PR disaster of free U2 album
    Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

    Despite the result, this is the end of the status quo

    Boyd Tonkin on the fall-out from the Scottish referendum
    Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

    Manolo Blahnik: Flats, Englishness, and Mary Beard

    The shoe designer who has been dubbed 'the patron saint of the stiletto'
    The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

    Scrambled eggs and LSD

    Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
    'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

    'Normcore': Blending in is the new standing out

    Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
    Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

    New leading ladies of dance fight back

    How female vocalists are now writing their own hits