Remortgaging

What is remortgaging?

Remortgaging is when you replace your existing mortgage with a new one, while staying in your property. You can remortgage with your current mortgage lender or with a different provider. But you should make sure to shop around, as there are many different deals on the market.

Starting the process of remortgaging can seem daunting. And we know you’ll want to be sure you’re making the right financial decision. This is where our property solicitors could help you.

Do you need a solicitor to remortgage?

If you’re switching to another mortgage but staying with your current provider, there will be no need for you to instruct a solicitor. But if you’re going to be changing lenders, you will need a solicitor to handle the legal paperwork involved.

As well as transferring your title deeds to your new lender, your solicitor will search the terms of your new mortgage offer and let you know if there’s anything you should check before proceeding. They will also ensure your existing mortgage can be paid off on time, so you won’t run into any issues.

We work with specialist property and mortgage solicitors who are experienced in this area. They will speak to you about your individual situation and help you work out the best course of action.

How does remortgaging work?

If you’re not sure how to remortgage your house, it can be difficult to know where to start. We’ve broken down the process into four key stages:

1. Arrange an Agreement in Principle (AiP)
   Similarly to when you’re buying a house, you’ll be able to get an idea of how much you can borrow before you start the remortgaging application process. While it’s not guaranteed that you’ll be approved, it will give you a good idea of where you stand.
2. Think about the costs involved
   Depending on the terms of your existing mortgage, you might be charged a fee for leaving. These fees can be expensive, so it’s worth checking this before proceeding. You’ll also need to consider other remortgaging costs like valuation and solicitor fees.
3. Start your application
   When you’ve made the decision to remortgage, it will be time to start your application. You’ll be asked for personal and financial details, as well as information about your current mortgage.
4. Complete your remortgage
   A credit check will be carried out to confirm your financial circumstances and a property valuation will be arranged. If you’re changing to another lender, your solicitor will arrange for the transfer of title deeds to your new provider.

When can you remortgage?

It’s possible to remortgage at any time. But as we’ve mentioned, it’s important to check the terms of your existing mortgage arrangement. Your lender might charge you for leaving early, so you should consider whether this cost will be worth it in the long term.

You might also want to think about how much equity you have in your home. This is the difference between the value of your property and the amount you owe on your mortgage. Generally speaking, the more equity you have, the more likely it is that you’ll get a better remortgage deal.

As everyone’s circumstances are different, there is no blanket answer to when you should remortgage. This is why we would suggest speaking to a mortgage broker beforehand. They’ll be able to let you know if now is the right time to go ahead, and which deals would suit you best.

What is the cost of remortgaging?

We’ve already mentioned the potential cost of leaving your current mortgage deal. But this isn’t the only expense to bear in mind. Some other charges to consider include:

• Arrangement fees
  This is a fee charged by your lender for setting up your new mortgage. It can cost around £1,000 but for more competitive mortgage deals, it could be higher. You can pay this fee outright or add it to your mortgage. But bear in mind that although adding the fee to your mortgage will spread the cost, you will be paying more in interest.
• Conveyancing fees
  If you’re switching to a new lender, your title deeds will need to be transferred to them. This requires the services of a registered solicitor, who will carry out all the necessary paperwork on your behalf. Solicitor fees vary, but they can cost around £350.
• Valuation fees
  Your new lender will want to know how much your property is worth before they offer you a mortgage. This is because they’ll want to be sure that if you’re unable to make repayments, the sale of your house would make up for their loss. Some lenders offer free valuations, but others can cost up to £400.

Why do people remortgage?

There are several reasons why you might think about remortgaging, including:

• Your current deal ending soon
  If you’re on a fixed rate deal and it’s about to end, you could benefit from surveying the mortgage market and finding out if there are any better deals available. If you don’t, you could be put on a standard variable rate, which might result in your monthly payments going up.
• You’re on your lender’s standard variable rate
  We would always suggest looking for another fixed rate mortgage deal three to six months before your current rate ends. But if you’re already on your lender’s standard variable rate, it’s not too late to switch.
• You want to overpay but aren’t allowed to
  If you’re in a financial position to make overpayments on your mortgage but your lender won’t let you, it might be time to switch. There are many providers who will allow you to pay off your mortgage quicker, so it’s worth shopping around.

While these are all attractive reasons for remortgaging, we would encourage you to consider your own situation first. For instance, if your financial circumstances have changed due to one person no longer working, you might find it difficult to find a better deal elsewhere.

In these cases, it could be worth checking if your existing lender can offer you a more suitable rate.

Can you remortgage with the same lender?

Yes, you can. Remortgaging with the same lender is known as a product transfer. This process is often quicker than moving to a new provider, and there are usually less affordability checks involved. But it is unlikely to save you as much money.

People usually choose to remortgage with the same lender if they’re worried their financial circumstances will prevent them from getting a deal somewhere else. Or if they want to get onto a new rate quickly.

Whether or not a product transfer is right for you will depend on your situation. But it could be a good option if you’re on a standard variable rate and want to get off it as soon as possible.

How long does it take to remortgage?

If you’re remortgaging with the same lender, the whole process can usually be completed within a week. You might even be able to arrange it entirely over the phone.

But if you’re moving to a new provider, the process can take longer – typically between four and eight weeks. This is because a new lender will need to carry out a valuation and affordability checks, which wouldn’t be necessary if you were staying with your existing provider.

There will also be another layer of legal paperwork when you’re moving to another lender, which can make the process take longer.

I want to remortgage – what do I do?

Remortgaging is not something you should do without prior consideration, so it's a good idea to seek legal advice at an early stage.

We can ensure that your remortgage goes smoothly and that all the legalities are taken care of.

Whether you're looking to benefit from a new rate, or you want to release some of the money tied up in your property, get in touch with us today. We’ll put you in touch with our expert mortgage solicitors.