The remortgaging process
We have compiled the information below in response to some of the most common questions we are asked about the remortgage process by our clients. If you can’t find what you are looking for below, please get in touch with our expert team, who will be happy to help, by calling 0161 696 6187.
What is a remortgage?
Remortgaging your property is essentially changing the mortgage that is currently secured on it by moving to a different lender.
If you change your mortgage product but stay with the same lender then this isn’t generally considered to be remortgaging, unless the terms of borrowing have significantly changed and you require legal work to be done in order to proceed.
There are several different reasons why someone might choose to remortgage their property. You can change your lender for a better interest rate on what you owe to cut costs. Alternatively, you might choose to borrow more money when you remortgage.
Some people choose to remortgage because they can find a better deal elsewhere from another lender that will make a significant difference to what they repay each month or over the remaining term of the mortgage. Others might choose to extend the borrowing term when they remortgage to lower their monthly costs that way, although it can mean they repay more in the long term. Some homeowners may go the other way and shorten their term when they remortgage, so they will pay it off quicker by paying more each month.
Some people may wish to remortgage to borrow more money (against the equity they now have in the property) to do improvement works on the property or if they need a lump sum for another reason. If the value of a property has risen significantly, the homeowner may want to release some of that equity by remortgaging.
If you currently have an interest-only mortgage, you may want to switch to a repayment mortgage on your property.
It’s worth noting that if you are currently in a specific mortgage deal (i.e. not on the standard variable rate, or SVR, from your lender), remortgaging will result in early repayment fees being due to your existing lender, so it’s important to work out whether the benefits of the remortgage will outweigh this.
Can I remortgage?
Whilst remortgaging can help some homeowners make significant savings on interest or raise money for something they need, it’s worth noting that remortgaging might not be the best solution for everyone, or may not be possible at all, depending on your circumstances.
You can usually remortgage if:
- Your home has increased in value since you bought it, giving you more equity in the property
- Your financial circumstances are equal or better than when you got your current mortgage e.g. your income has increased
You may not be able to remortgage if:
- Your income has decreased significantly since you got your current mortgage
- Your property value has decreased to a degree that you are in negative equity
- Your credit record has been negatively affected since you got your current mortgage
- The amount owed on your mortgage is small – some lenders won’t offer a mortgage for amounts less than £25,000
How does remortgaging work?
The remortgaging process is essentially applying for a new mortgage, a bit like you did when you first purchased the property. You will need to pass the same identity, affordability and credit checks this time around too, so remortgaging might not always be possible if your circumstances have changed negatively in any of these areas or if the value of your property has gone down to a point where you are in negative equity i.e. owe more on the property than it is currently worth.
A remortgage conveyancing solicitor can handle the legal side of the entire process, including checks and searches on the property, communications between lenders and any valuation surveys required by the new lender on your home.
For more information on the process or a remortgage solicitor quote, call us today on 0161 696 6187.
How long does a remortgage take?
Whilst remortgage conveyancing doesn’t usually take as long as a new property purchase or where there is a buying chain involved, the length of time for the process will vary, depending on how complex the transaction is. Expect anywhere between about six weeks to four months.
How to remortgage
If you want to remortgage, the ideal time to start making enquiries is around three months before your current deal ends with your existing lender, or anytime if you are already on their standard variable rate.
The process of remortgaging usually includes the below steps:
- Check your current deal to make sure you hold all of the information you need about the interest rate you’re paying now, the type of mortgage, the remaining term and what your current monthly payments are
- Find a new mortgage deal that suits your requirements. You can do this yourself using a comparison website, or use a whole-of-market broker who will be able to match your individual circumstances with the lender that offers the best deal or is most likely to offer you a mortgage. You can also approach your existing lender to see if they will match the new deal you’ve found, or approach a lender that you already have another financial product or account with e.g. a current bank account, to see what they can offer you in terms of remortgage deals
- Apply for the mortgage deal you choose
- Instruct a conveyancing solicitor
- Wait for the final decision on your mortgage application
Do I need a solicitor to remortgage?
If you are simply switching mortgage products or borrowing more with your existing lender then it is unlikely that you will need a solicitor. However, if you are remortgaging with a different lender, you will need a solicitor to handle the legal side of proceedings. There are legal steps that need to be taken as part of the remortgaging conveyancing process. If you also want to add someone else to the mortgage at the same time, such as a partner, this is known as a transfer of equity[RF4] and will also require the assistance of a solicitor. The same applies for removing someone from the mortgage.
Remortgage conveyancing fees
Remortgage solicitor fees can vary, depending on factors such as the conveyancer’s rates, the location of your property, its value and any complexities that might apply to your specific circumstances. There will also be remortgage legal fees which are set costs from third parties, such as ID checks, an up to date property valuation and registering changes with the Land Registry.
For a quote based on your individual circumstances, get in touch with Stephensons’ experienced conveyancing team on 0161 696 6187.