In the current economic climate, with fluctuating mortgage rates, you may be familiar with the term ‘remortgaging’ being mentioned frequently. But what exactly does it mean, and what does the process involve? Below, we answer some of the most common questions about remortgaging a property.
What is remortgaging?
Remortgaging means obtaining a new mortgage for a property you already possess. This can be done either to replace an existing mortgage with one that offers better terms or to borrow additional funds against the property. Essentially, it’s the process of switching your current mortgage to a new deal, either with your existing lender or a different one.
When you initially secure a mortgage, you might receive an introductory offer with a fixed low rate for a set period. These introductory rates are often very attractive and can last for several years. Once this term ends, the mortgage typically reverts to the lender’s standard variable rate (SVR), which is often significantly higher than the initial fixed rate. This increase can lead to higher monthly payments, which is why many homeowners consider remortgaging at this point.
However, there may be more competitive deals available from other lenders. By remortgaging, you could potentially secure a better rate and save money. It’s not just about finding a lower interest rate; remortgaging can also provide an opportunity to release equity from your home, which can be used for various purposes such as home improvements, paying off debts, or funding other significant expenses.
When should you consider remortgaging?
Most homeowners choose to remortgage at the end of their fixed term. This is typically the most cost-effective time to switch, as it avoids early repayment charges that can be incurred if you leave your current deal before the end of the term. However, it is possible to remortgage at any time, though doing so before the end of your fixed term may result in early repayment charges. These charges can sometimes be substantial, so it’s important to weigh the potential savings against the cost of exiting your current mortgage early.
In addition, you might consider remortgaging if your property has significantly increased in value. A higher property value can improve your loan-to-value (LTV) ratio, potentially qualifying you for better mortgage deals. Similarly, if your financial situation has improved, such as an increase in income or a reduction in other debts, you might be eligible for more favourable mortgage terms.
Should I remortgage my property?
Deciding whether to remortgage your property is a significant financial decision and should not be taken lightly. It is crucial to seek independent advice from your current lender, a financial advisor, or a mortgage advisor to determine the best course of action for your specific circumstances. These professionals can provide tailored advice based on your financial situation, goals, and the current mortgage market.
Do I need a solicitor or conveyancer to remortgage my property?
The simple answer is yes, engaging a solicitor or conveyancer is essential for the remortgaging process. The conveyancer’s role in a remortgage transaction includes:
- Redeeming any outstanding balance with the current mortgage lender: This involves paying off your existing mortgage and ensuring that the lender’s charge is removed from the Land Registry title.
- Entering into the new loan agreement with the new mortgage lender: Your conveyancer will handle the legal aspects of the new mortgage, ensuring that the new lender’s charge is registered with the Land Registry.
The conveyancer will also conduct various checks and searches to ensure there are no legal issues that could affect the remortgage. This process helps to protect both you and the new lender.
What information will your conveyancer need?
Your conveyancer will require the following information to proceed with the remortgage:
- The property address and Land Registry details: This includes verifying the ownership and any existing charges on the property.
- Your current mortgage account details: This information is necessary to redeem the existing mortgage.
- The new mortgage lender’s details and a copy of the mortgage offer: The conveyancer will need to review the terms of the new mortgage and ensure that all legal requirements are met.
How long does a remortgage take?
The duration of a remortgage transaction can vary based on several factors. On average, the process can take anywhere from four to eight weeks. However, this timeline can be influenced by various elements, such as:
- Mortgage conditions: There may be specific conditions set by the new lender that need to be met before the remortgage can proceed.
- Land registry issues: Any discrepancies or issues with the Land Registry details can cause delays.
- Valuation and surveys: The new lender may require a valuation or survey of the property, which can take time to arrange and complete.
It’s important to stay in regular contact with your conveyancer and mortgage advisor throughout the process to ensure everything is progressing smoothly.
Comment
Remortgaging can be a beneficial financial move, offering the potential for lower interest rates, reduced monthly payments, and access to additional funds. However, it’s essential to understand the process and seek professional advice to ensure it’s the right decision for your circumstances.
If you have any further questions or need assistance with the remortgaging process, our team of experienced solicitors is here to help. Contact us today to discuss your options and find the best solution for your needs.
How can we help?
Gayle Fordham is a Partner and Head of our Residential Conveyancing team.
If you have any queries on the above subject, please do not hesitate to get in touch with Gayle on 01206 835225 or complete our online enquiry form.