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Remortgage Process Explained

13/10/2017

There are many different reasons why you might need to remortgage your home. It may be to free up equity for an extension or to settle a second charge on the property. It could even be to simply secure a better mortgage interest rate. The majority of remortgages take place between 2 and 5 years after the original mortgage was taken out; this is normally linked to when the preferential mortgage rate term expires.

The remortgage conveyancing process is faster than when you purchased the property with the key objective to satisfy the requests of your new mortgage lender. Unlike on the purchase, the solicitor does not raise legal enquiries to investigate the legal title (this would have been done when you purchased the property), although they do look for restrictions and charges that could affect their ability to register the property with the new mortgage interest. This article explains exactly what happens during the conveyancing for your remortgage.

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What is the Remortgage Process?

ID checks and proof of funds

Your solicitor will need to prove who you are through their ID checks. Our solicitors do this using 1 form of photo ID and 2 forms to prove your address; both are then checked through an online checking system which costs £8 per name (read this article on What ID does my conveyancing solicitor need).

If you are remortgaging for a lower amount and looking to pay off some of your mortgage, then your solicitor will need to confirm the source of the funds you are using to pay off the mortgage (read this article on How to prove source of funds)

Request title deeds and/or official copies of the register, and copy lease (if leasehold)

The title deeds are obtained from you and the Official Copy of the Register of Title is obtained from the Land Registry at a cost of £3 per title along with the title plan for £3. The Official Copies state who the current legal owners of the property are, what restrictions are on the title and what charges are registered. For most mortgage lenders the Official Copies will be sufficient for their purposes, however some require the title deeds to be reviewed by the solicitor as well.

If the property you are remortgaging is a leasehold (read more about leasehold properties) then the solicitor reviews the covenants in the lease to confirm who they have to serve notice on to confirm the change of charges (mortgages) to post-completion (read more about What Happens Post Completion). The solicitor will also confirm the leasehold title is compliant in accordance with the Council for Mortgage Lenders (CML) Handbook.

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Mortgage offer and request current mortgage statement

Your mortgage lender issues their mortgage offer to your solicitor. Different mortgage lenders will have different requirements for their solicitor to adhere to. Whereas some won't ask the solicitor to do anything more than their obligations under the CML, some mortgage lenders request additional information to be provided to them before they will agree to funding the proposed mortgage. For example, Paragon Mortgages requires the solicitor to provide copies of planning permission, building regulations and rights of way, however Santander Plc doesn't require this.

If there is an existing charge registered on the property, then the solicitor requests for the mortgage lender to provide a current mortgage statement in order to discharge the balance on completion.

Order local authority search or indemnity insurance

Different mortgage lenders have different criteria with regards to the local authority search. Some mortgage lenders are happy for you to take out local authority search indemnity insurance, some will not and expect you to obtain either an official local authority search or a personal regulated local authority search (read to find out the difference between official and personal).

This effects you both in the cost and in the time it takes to obtain the desired information. For search local authority search indemnity insurance the policy is issued within minutes and the costs are as stated to the right.

The cost of a regulated local authority search is fixed at £124, however the cost of an official local authority search obtained directly from the council and the cost ranges from £60 up to £300.

There are also some mortgage lenders who require you to provide environmental searches, chancel indemnity and water and drainage searches.

Find out from the CML which property searches or indemnity insurance you need

Send off the certificate of title, OS1 and Bankruptcy check

The solicitor will take out an OS1 priority search to freeze the title of the property from being able to have any changes applied to it and then complete a bankruptcy search on you. The OS1 costs £3 per title and the bankruptcy search costs £2 per legal owner searched.

Once your solicitor is satisfied that the title is satisfactory for the purposes of the mortgage lender, that you have sufficient funding to redeem the current charge on the property and that you have passed their due diligence, then the solicitor will agree with you a date to complete. They will then send off the certificate of title to the mortgage lender requesting the release of the mortgage funds in time for completion.

Completion and the costs of remortgaging your home

The solicitor sends you a financial statement before completion detailing the balance required to complete or due to you. This is an example of a freehold remortgage financial statement for a property valued at £300,000:

£	Description
£250,000	Mortgage advance from new lender
*Less:*
£250,000	Mortgage to redeem
£299	Conveyancing Solicitors' Legal Fee INC VAT (some mortgage lenders offer free legals with their mortgage product, however this means you have to work with their solicitor and can't choose your own)
£40	Land Registry
£30	Local Authority Search Indemnity Insurance
£8	Online ID check
£6	Official Copy and title plan
£10	OS1 & Bankruptcy
£393*	Balance to be paid to complete remortgage

* Leasehold remortgage financial statements would need to include a notice fee payable to the freeholder and any other leasehold payments due.

Once your mortgage advance is received in from your new mortgage lender and you and your solicitor are ready to complete, then your solicitor will redeem your existing mortgage, settle their invoice and any disbursements (online ID check, official copy costs and OS1/bankruptcy). The balance, if any, is then repaid to you. The only amounts left will relate to the Land Registry fees and any costs due to the property being a leasehold.

Post completion

The process for discharging the old mortgage and registering the new mortgage at the land registry can take between 1 to 6 months after completion. The time delay is linked to the Land Registry having a backlog of work. This can be extended further for leasehold properties if the freeholder/managing agent delays in releasing the notice. Delays can be worsened if your service charge and/or ground rent are in arrears so make sure that you have settled these prior to remortgaging otherwise you may have a stand-off with your freeholder not releasing your notice until your service charge account is settled (read more about What happens after completion).

How long does a remortgage take?

A remortgage can take a matter of weeks to complete once you have a mortgage offer. The delay normally relates to the time it takes to get your mortgage offer (remember a mortgage in principle isn't a mortgage offer and you'll still need to get a mortgage valuation).There can also be delays with the freeholders providing notice after completion, especially if you haven't paid your service charges and ground rent.