Remortgaging can be a stressful process especially if you do not understand the terminology which is used throughout the remortgaging process. Don’t worry as Girlings' expert conveyancing team is here to help with their simple guide to remortgaging.
Reasons to remortgage include:
- Finding a lower interest rate mortgage - if your existing mortgage offer rate has ended or will end shortly, you might find a better deal. It is definitely worth checking the latest offers available to you, especially if your home is worth more than when you first bought it as you could have access to a wider range of mortgage deals
- Applying for additional borrowing - you might want to borrow more for home improvements or consolidate any existing credit card or loan debts, generate a cash lump sum or a special purchase
- Safeguarding against potential rate rises in the future - you can opt to fix your interest rate
- If there are any big changes in your life, whether planned or unexpected for example starting a family or expecting a significant change to your income, this could mean that your current mortgage no longer suits your needs.
How does remortgaging work?
Remortgaging works the same way a normal mortgage does, although there may be more legal work involved
Here are the main steps:
1. Find a new mortgage
To start with ask your current lender for a new deal. They may be able to offer you a better option to keep you with them. Then, shop around to see if there are any better offers. Make sure to take all monthly costs into consideration, not just the interest rate, and think carefully about what deal would work best for your specific situation.
2. Consider all the costs
- Application fee – a charge to set up your new mortgage. Also referred to as an arrangement, product or booking fee
- Valuation fee – to confirm the current value of your property
- Solicitor or Conveyancers fee – a solicitor or conveyancer will need to manage the transfer of your mortgage
- Ask any prospective lenders if you’d need to pay an exit fee or early repayment fee if you want to remortgage again in the future.
3. Apply for your remortgage
When you've decided which mortgage deal to go for, you're ready to apply. The application process involves a credit check, and you will need to provide proof of earnings and details of your outgoings and financial commitments. The lender will carry out a valuation/survey on the property to ensure that your property meets its lending criteria and the worth/value of your property.
4. Receive your offer
After carrying out their checks, the lender will provide you with a mortgage offer if you meet their requirements.
5. Find a conveyancer or solicitor
The various legalities of remortgaging require a conveyancer or solicitor, who can manage the paperwork and transfer of funds on your behalf. Your lender may have a partner firm or you can find an independent solicitor or conveyancer to work for you who is on the lenders Panel.
6. Sign your new mortgage deed
Your solicitor or conveyancer will report to you and you will be asked to sign the deed for your new mortgage in readiness for completion.
7. Set the completion date
Once the legal work has been completed, a completion date will be agreed. This is the date that your new mortgage starts, and your old mortgage is repaid and closed off.
8. Registration of your new mortgage
9. Your solicitor or conveyancer will then apply to the Land Registry to have the register updated
Your old mortgage charge will be removed and the new mortgage charge will be entered on the register.
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For further advice on this and other Residential Property issues contact Shehaam Van Twest or our Residential Property department.
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