When you remortgage your home, there are a lot of things to consider. You need to make sure that you’re getting the best deal on your mortgage, and that you’re doing everything you can to secure your financial future. But one important thing to think about is whether you need a solicitor when remortgaging.
You definitely needed a solicitor or conveyancer when you bought your home but do you still need one even though you are not moving?
This article looks into how a remortgage works and whether you need to worry about getting a solicitor.
What does remortgaging mean?
Remortgaging is the process of switching your mortgage from one lender to another, without moving home. It can be done for a variety of reasons, including to get a better interest rate or to borrow more money.
You apply for a new mortgage with a new lender. This is then used to payoff the old mortgage completely.
Why do people choose to remortgage?
People choose to remortgage for a variety of reasons.
Some people may switch mortgages in order to get a lower interest rate, others may do so to unlock extra funds that they can use for things like home improvements or consolidating debt (Can you remortgage to pay off debt?). Still others may switch mortgages in order to avoid being stuck on their lender’s Standard Variable Rate (SVR) at the end of their initial benefit period.
A remortgage is also a convenient way to add, or remove, someone from the mortgage. This is called transfer of equity.
As you are applying for a brand new loan, all of the aspects of a mortgage need to be decided, and do not always need to be kept the same. For example:
- Mortgage amount – You can borrow more, or less
- Mortgage term – Make the term longer, or shorter
- Interest rate – Move from a variable rate over to a fixed rate
- Repayment method – Change from interest only to repayment
- Change borrowers – With a transfer of equity
- Offset – Change to an offset mortgage to take advantage of savings
It’s important to remember that you are not locked into your initial mortgage agreement and rate for the entire repayment period – you have the option to shop around for a new product if you feel your current one is no longer providing the best value.
Keep in mind that you may have to pay penalties if you switch during your initial tie-in period, but it’s worth it to many people to get out from under an unfavourable interest rate or terms.
Why do you need a solicitor?
When you remortgage, you are essentially taking out a brand new mortgage to replace your current one.
This process can be quite complex, as it entails transferring the balance of your original mortgage over to the new lender, and there are a number of legal documents that need to be drawn up and agreed upon in order for everything to go through smoothly.
For this reason, it is necessary to have a qualified conveyancing solicitor to handle your remortgage. A solicitor will ensure that all the necessary legal documents are drawn up correctly and that you are fully informed of all the terms and conditions associated with your new mortgage agreement.
An important part of changing mortgage lender is the legal charge on your property. Property ownership records are kept by the Land Registry and transferring this charge to your new lender requires a solicitor. They will liaise with the Land Registry to ensure that everything is updated correctly, so that you can be assured of smooth processing of your remortgage.
CONTACT A REMORTGAGE EXPERT
If you wish to investigate your re-mortgage options we can put you in touch with a fully qualified whole of market mortgage broker.
Should I use the mortgage lender’s solicitor?
When you remortgage, you have the option to use the panel solicitor provided by your mortgage lender. This will often be at a reduced rate, or possibly free. While this may seem like the easiest option, it’s not always the best choice.
When buying a property it’s important for the seller and buyer to have their own legal representation. This is because they may have different interests and needs, which can be in conflict.
A re-mortgage is a fairly straightforward transaction and because of this, lenders use conveyancers for the legal aspects as they will cost less than a solicitor. There’s nothing wrong with this but the service may be quite basic and may not move along as quickly as you would like.
So by accepting the ‘free legals’ offer you don’t have to pay for the service but you will often get a ‘no frills’ experience. If you are not under any time pressure then this is normally OK.
Choosing your own solicitor gives you more control over the process, the timing and allows you to obtain personalised advice. Plus, if something goes wrong with your remortgage, you’ll want someone you can trust to help resolve the issue – and that’s not always going to be your mortgage lender’s solicitor.
It is a free choice, but you will need to make a decision at the point you apply for the remortgage.
What does a conveyancing solicitor do?
When you remortgage, you are applying for a new mortgage to replace your current one. Your conveyancing solicitor will check the ownership title to make sure it is correct and valid, and also review all of the documents related to your current mortgage.
Your solicitor will then make sure that any conditions required by your new lender have been met before preparing the paperwork for you to sign. Searches are not required when remortgaging, but your solicitor will still be required to review the information you provide and make sure everything is accurate.
It will be their responsibility to receive the money from your new lender and to then pay over the balance required to settle the outgoing mortgage account.
Do you need a solicitor to remortgage with the same lender?
A remortgage with the same lender is also called a product transfer.
This is more of an admin process as the lenders legal charge remains in place, but your product interest rate is transferred to a new deal.
Because there’s no legal paperwork, it’s generally quite a quick process.
It’s important to remember that while product transfers are often simpler, they do not always offer the best value or may not suit your needs as much as a remortgage with a different lender. It is essential to weigh up all of your options before making any decisions.
How long does a remortgage take?
The time it takes to remortgage depends on a number of factors but generally speaking, you can expect the process to take around 4-8 weeks. This includes having your solicitor check over all the documentation to make sure everything is in order, as well as waiting for the funds to transfer from your new lender.
Of course, this is just a guideline and if there are any problems with your application – such as missing documents – it could take longer.
It’s always a good idea to start early so that there are no delays and you can enjoy the benefits of your new mortgage as soon as possible.
As with a moving home mortgage, the lender will issue a mortgage offer once it has finished processing your application. At this point you and your broker can decide when the best time would be to start the new mortgage, as this does not have to happen immediately.
One important consideration will be any exit fees charged by the existing lender.
As you already own your property, the lender’s basic valuation is unlikely to uncover anything serious, although they may not agree with your valuation estimate.
But your credit status may not be so predictable.
Issues hidden in your credit report will be visible to the new lender, who may then start to ask extra questions. Perhaps there’s a small amount of bad credit, or someone else is still financially associated to you. If you are at all concerned you can ask to see a copy of your credit report to make sure everything is accurate and up to date.
What happens when the remortgage completes?
On the day your remortgage completes, the old mortgage deal will be paid off and you will become responsible for the payments on the new deal. This is all handled by the solicitor, who will receive monies and then send them on to the appropriate people.
If you have borrowed some extra money (capital raising) then the solicitor will transfer this into your bank account. This may take a day or two to arrive.
Your solicitors will already have arranged for the charge to be registered to your new lender and for the old mortgage account to be closed. You should receive a letter from your new lender confirming all of these details.
Can you remortgage to buy another house?
Yes, this is possible by capital raising against the equity in your home.
You apply for a larger mortgage to access your equity. This extra money can then be used to either fully pay for a new house (as a cash buyer) or for it to be used as a deposit.
If it’s the second option then a further mortgage will be needed to cover the rest of the purchase price. You may need one of these:
Have a look at this article which answers the question in a bit more detail.
Getting the best mortgage deal
An independent mortgage broker can help simplify the process of remortgaging, while also helping you to get the best deal possible. A broker will be able to provide you with advice and guidance tailored to your needs, as well as access to a wide range of lenders and products. There will be some mortgage fees to pay and a broker can help to see how this affects the mortgage overall.
Many re-mortgage deals are only accessible by mortgage intermediaries.
Your broker will work with you to understand your financial situation, your goals and the type of mortgage that best suits you. They’ll also be able to negotiate competitive rates on your behalf, as well as answer any questions you might have about the remortgage process.
By working with a broker, you can benefit from their knowledge and expertise to ensure that you get the best deal for you.
