Managing a mortgage is one of the trickiest responsibilities for any homeowner, and it's common that most people strive to complete their mortgage payments as early and smoothly as possible. For homeowners stuck with higher and longer payment terms, is remortgaging the right solution for you?
If you have a substantial amount of equity and are struggling to keep up with monthly payments, remortgaging is the best solution to release some extra cash while still staying in your existing home.
This is the process of paying off the debt of your mortgage loan with a new lender, by using the equity (the amount of money your home is worth, in excess of the loan) that you have in your current property.
Bear in mind that this isn't a new mortgage, but rather a restructuring of your existing mortgage loan. When you remortgage, you are agreeing to a new mortgage deal, with new terms and conditions.
What is Remortgaging?
Remortgaging involves the replacement of an existing secured loan with a new one.
First-time buyers can also combine the purchase of a new property with a mortgage. If you're already a homeowner with an existing mortgage loan, you can switch to a new lender or to a new or a better deal.
The appeal of remortgaging is apparent, but before you take the plunge and get into a new agreement with a lender, it's important to ask: do you need a solicitor to remortgage? Before we get into that, it helps to know the basics of the remortgaging conveyancing process, so that you have some clues whether you'll need a professional in the picture.
Understanding the Remortgaging Conveyancing Process
1. Show and Verify Your Identity
All mortgage contracts require specific information from the borrower, and that means you have to be able to prove your identity before you can sign any agreement. This means presenting legal proof of your name, age, address and occupation.
The lender will also require proof of your income and your credit history, and may also request proof of your bank statements and tax returns.
2. Show and Verify Proof of Income
The lender will want to see that you have an income before agreeing to lend you any money. This is because, in the event of the borrower defaulting on their loan payments, the lender can pursue their income to recover the money.
The loan applicant will have to provide the lender with proof of their income and how they earn it, like pay slips and bank statements. The lender may also ask to see your tax returns.
3. Check Title Deeds
The lender will want to be sure of your ownership of the property you are remortgaging. This involves checking the title deeds. This is the property deed confirming that you own the house and are clear to sell the property. If the title deeds aren't in order, the lender may not be willing to take the risk of lending you money to remortgage.
4. Check Redemption Statement
The lender will want to see the redemption date of your current mortgage. This is the date that the loan was due to be fully repaid. The lender will compare this date with the redemption date of your new mortgage. If it is later than the redemption date of your current mortgage, then you will have to make repayments to your new lender until the redemption date of your new mortgage.
5. Conduct Property Searches
The lender will want to know if there are any outstanding mortgages you have on this property, and if there are, they will usually conduct a property search to make sure they are clear to lend you the money. The property search involves the lender checking records with the Land Registry to confirm the property isn't part of a title to be sold or disputed by another party.
6. Conduct Further Searches and Checks
Some lenders will go over the property with a fine-tooth comb to make sure there are no problems with the property or property tax that could affect the lender or the borrower. If the lender detects a potential problem, they will usually require the borrower to take remedial action as part of the remortgaging agreement.
7. Review Remortgage Offer
When all the checks have been completed and the lender agrees to lend you the money, the lender will prepare a remortgage offer for you to sign. The lender will also explain any details about the remortgaging benefits, such as the new interest rates, the loan term, and the fees and charges involved.
8. Send Certificate of Title
When the remortgaging agreement is signed, the lender will send the borrower a title deed to the property to replace the original deed. The new title deed (the "Certificate of Title") will show all the details of the remortgaging agreement, including the new redemption date.
9. Transfer Funds
After the remortgaging agreement has been signed, the lender will send you a check to start the repayment of the mortgage loan.
10. Update Transfer Deed
The new title deed can then be used to transfer ownership of the property to you via a transfer deed. The transfer deed is a legal document proving that you own the property, and without it, you will not be able to sell the property.
Do You Need a Solicitor to Help You Remortgage with the Same Lender?
If you are changing to a better rate or to a new mortgage with the same lender, they may insist on a solicitor because all the paperwork is still new to you, and if there's anything wrong with the house or the mortgage, or you don't understand your rights, you could jeopardize your deal.
Lenders will want to ensure the property is owned unencumbered by any other debts, but if you own the house with someone else, you will have to prove to the lender that you are still the sole owner of the property.
With that in mind, you don't need to hire a solicitor if you're remortgaging with your current lender since it's more of a product transfer. However, if you're remortgaging with a different lender, then it's more beneficial to hire a remortgage solicitor to help you in the process.
The Bottom Line: Remortgaging and Whether You Need a Solicitor
If you are remortgaging, it is best to choose a solicitor to help you. This should save you time and money, as well as get all the necessary documents together in a short time. If you are remortgaging with the same lender, then it is not necessary to hire a solicitor.
In conclusion, remortgaging is a big decision for any homeowner, and can have a huge impact on your finances. If you're looking to remortgage, it's always best to speak to someone in the industry who can explain everything to you in detail.
How Can We Help You?
If you're looking for conveyancing quotes in London, it's best to check out Conveyancing Calculator. We offer a conveyancing calculator and match you with fully-regulated conveyancing professionals that provide competitive conveyancing quotes across the UK.
Our SRA-regulated solicitors and licensed conveyancers can protect your property sale, purchase, or help you with a remortgage. Looking for a residential conveyancing expert? Reach out to us today!