I’m wondering how the building value impacts the mortgage, let’s say that we paid 500k a house that worth 1M (how lucky we are , or we simply bought a 500k house and renovate it with cash coming from other sources than the mortgage).
With 20% of cash, mortgage would be 400k, the mandatory part to be given back in 15 years would be 65k if I’m not wrong.
Now if an expert inspector is evaluating the house for 1M:
Does this change the power to re-negotiate the mortgage with the bank? The house value “already payed” given as a warranty worth more than the mortgage itself, mortgage is 400k while 600k are already in the property, even dying today the bank is on a safe position
The 65k are still mandatory to be payed in 15 years? If re-negotiating based on the full value, 1/3 of the house is already payed off and this would eliminate the need of pay backs
Mortgage pricing often involves a trade-off between risk and profitability. For instance, a 500k mortgage on a 1M property represents a low Loan-to-Value (LTV) ratio, which minimizes the lender’s risk. Conversely, an 800k mortgage on the same property carries higher risk but yields significantly more interest revenue. Because lenders must balance risk management with profit margins, a lower LTV does not always translate to a lower interest rate.
Mandatory amortization is contingent upon your Loan-to-Value (LTV) ratio. If your LTV is at the upper limit (e.g., 80%), the lender will require you to amortize the loan down to a predetermined lower threshold within a 15-year timeframe. If your initial LTV sits below this target threshold, principal reduction payments are generally waived. Your lender can provide your exact target figures upon request.
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, or we simply bought a 500k house and renovate it with cash coming from other sources than the mortgage).