How do I re-mortgage my property?
Posted on 10th February 2020
There are a number of reasons why you may be considering re-mortgaging your property. This may be due to a change in your circumstances, or to release equity and raise capital, as a handful of examples. Whatever the need for the re-mortgage process, seeking prior advice is imperative. At MG Legal, our team of conveyancing solicitors deal with re-mortgage transactions on a daily basis and, before proceeding with a re-mortgage, there are certain factors which should be carefully considered.
Before you proceed with a re-mortgage, our solicitors in Lancaster would always suggest considering your options, one of which being to contact your current lender and advising them of your intentions. In some cases, your lender may be able to offer a better rate in order that you reconsider leaving, and continue your custom with them.
This, however, brings us to our next point. Although you may be provided with a cheaper deal, this does not automatically mean that the same is the best option for you. Our property solicitors would, therefore, always recommend seeking the advice of your mortgage broker, whom can provide specific advice on the deal and how suitable the same may be to your individual circumstances. Mortgage brokers are employed to compare the various products available across the market, and find those that may be best suited to you. As above, there are a number of considerations that you should discuss with your broker, such as:
- Affordability; You should evaluate how you will meet the monthly repayments, discuss exactly what the payments will be each month and whether the same will be on a repayment or interest only basis.
- Change in Circumstances; Question, what are your plans for the future? A mortgage is a huge commitment and, should there be a significant change in your personal circumstances, is this going to be the best product for you? Which leads us to..
- Flexibility; The need for flexibility. Some, more than others, will require flexibility in terms of their mortgage and this should carefully be discussed with your mortgage broker. This will help your broker in advising what rates may be best for you, and whether the same are to be fixed or variable.
We will, however, leave the product searching to the experts and we will stick to our own expertise – ‘the legal bit’. Once you are happy, and have sought the advice of your broker on your potential options, it is the role of your conveyancing solicitor to carry out the legal formalities connected with the re-mortgage.
Your conveyancing solicitor will be issued a copy of your formal mortgage offer, which sets out all terms and conditions of the proposed mortgage. Whilst your conveyancing solicitor is not regulated or authorised to give financial advice, our role is to ensure you are fully aware of the terms the mortgage lender is proposing that you enter into, upon completion of the re-mortgage.
Upon receipt of your formal mortgage offer from your lender, our solicitors in Lancaster review and outline the same within our report to you, titled ‘Your Mortgage’. The report sets out the main terms of the loan, inclusive of any specific conditions that are to be complied with during the loan period, how payments are to be made, and whether there are any additional charges you should be aware of.
More often than not, there are additional fees associated with the mortgage which you should be aware of. These should, again, be discussed with your mortgage broker, however, be mindful to keep an eye out for the following:
- Arrangement Fee: Your lender may charge an arrangement fee for the arranging of the mortgage. This will be outlined within the offer and should be discussed with your broker from the outset.
- Early Repayment Charge: Early repayment charges are extremely common and are, in most cases, calculated as a percentage of the amount outstanding on the loan at the time. This is something to carefully consider in respect of your future plans, if you intend to redeem early, it is important to check that rate at which an early repayment charge would be charged.
- Late Payments/Over Payments: In addition to the above, it is imperative that you are aware of any potential penalties that may be charged for any late or over payments. Mortgage lenders will reserve the right, at all times, to re-possess the property should the monthly repayments not be met.
- Insurance: Lenders impose strict regulations on ensuring that the property is insured appropriately. This is so that they, and their security, are adequately protected in certain circumstances. At MG Legal, our property solicitors will request a copy of your insurance schedule in order that the same can, if necessary, be forwarded to the lender. Our conveyancing solicitors require sight of the same to ensure that the interest of the lender is noted thereon.
- Search Insurance: With re-mortgage transactions, although a fresh mortgage offer is being issued, the process differs from a purchase transaction. At the point of purchase, searches are carried out to reveal any adverse issues that may potentially affect the property and, if necessary, are reported to the lender. With a re-mortgage, there is no need for such searches to carried out, however, search insurance is required to protect against any entries that may have arisen since the original searches were conducted.
- Bank Transfer Fee: In most cases, mortgage lenders charge a release of funds fee ranging from £20-£40. This fee is deducted from the mortgage advance released by the lender and, is unavoidable, however, is an additional charge you should be aware of.
- Cash-Back: On a more positive note, the mortgage offer will also outline whether there is any cash-back due on completion. This is, usually, released with the completion funds, or within 30 days of the same.
Once you are happy with the offer and are ready to proceed, our solicitors in Lancaster then take the steps required to proceed to Completion. This, in a nutshell, involves requesting the necessary paperwork which allows the existing charge over the property to be redeemed, for the funds to be released in respect of the re-mortgage, and attending to the registration formalities, noting the new lender holding security over the property.
Although the above does make the process seem simple, and our property solicitor’s job is to ensure the same feels that way to you, it is vital that you understand the re-mortgage process. If you are considering re-mortgaging, contact MG Legal’s solicitors in Lancaster today, at firstname.lastname@example.org, for advice on what the re-mortgage will entail.
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