Julie Sheldon
Licensed Conveyancer
Phone: 0113 200 7480
Email: property@averywalters.com
Residential Conveyancing - Remortgaging a property
What is a remortgage?
Remortgaging is the process of securing a new mortgage on a property that you already own. There are many reasons people consider remortgaging a property as it's a huge opportunity to save thousands of pounds a year on your mortgage repayments.
Remortgaging is a process that ordinarily happens at the end of a mortgage deal (normally a fixed mortgage) - but there can be other good reasons to switch early.
If you've paid off more of your mortgage, your property has increased in value or you're worried about a rate rise, remortgaging can be a great way of saving money and giving you peace of mind.
Contact our licensed remortgage conveyancing solicitors by calling our Leeds law firm on 0113 200 7480 or Harrogate law firm on 01423 564551. Our remortgage solicitors are ready to help you.
How does remortgaging work?
Before starting any remortgage application, it is advised that you get your property valued by a few estate agents, as well as doing some research on property websites to get a current value of your property and how much to apply for.
A remortgage replaces any current mortgage in place. In order to secure a remortgage, the property owner has to go through a new application process. Throughout this process, much like the process when applying for the initial mortgage, a lender will assess the applicant’s income and whether they meet their affordability and stress tests.
If you are applying for a loan from a new lender, they will more than likely want to come and value the property, so they can ensure that the value requested is correct.
A new remortgage will either be the same value as your current loan or more if you want to secure a little extra cash, e.g for home improvements. If you are looking at remortgaging with the same company, legal services are unlikely to be needed (but residential lawyers Avery Walters are available for peace of mind for things like ID checks and property searches), but moving to a new lender will always require conveyancing lawyers as there will be legal checks and registration with the Land Registry to be completed.
Why consider remortgaging?
There are a number of reasons why you would want to consider remortgaging your house. These reasons include:
Your current mortgage deal is coming to an end - Normally the best rates are those that are fixed for 2,3 or 5 years. When these agreements come to end, the rate usually increases to the lender’s standard variable rate, and thus monthly payments are increased. By remortgaging, homeowners can ensure that they pay less towards a mortgage each month.
More than one property is owned - As a mortgage is repaid, over time you will build up the level of 'equity' you own in the property.
For example, if you invested 20% of the value as your deposit when you initially bought the property, you owned 20% of it outright. Over time, through the paying of the mortgage and your property’s value increasing, you may now own 35% outright. This figure is important when the time comes to remortgage, as you will be borrowing at a lower loan-to-value (LTV). When you bought, you will have used an 80% LTV mortgage, but now you would only need to borrow 65%.
Lenders normally offer better rates as the LTV decreases due to the image that the loan is less risky - which usually means reduced monthly repayments.
You simply want a new deal - If at the beginning of your agreement you envisaged that the agreement would suit your needs for the next 2 - 5 years, but it becomes apparent that this is not the case. Reasons people want to change may include that you can get a better deal elsewhere and increased flexibility to overpay or utilise repayment holidays.
You need to borrow more - a remortgage can be a quick way to secure some cash you’ve built up, if and when needed. This will increase your debt, so careful consideration should be made when taking this route.
To beat a rate hike - This reason will mainly apply to those NOT on a fixed rate. A mortgage rate and any Bank of England base rates are usually linked closely by lenders. If an increase is announced by the BoE, lenders Could increase the cost of monthly repayments, so homeowners may want to beat these increases to something that give more certainty in the months following.
When to consider remortgaging?
It is advised to start looking around 6 months before the end of your current mortgage for a new deal. The process to secure a new agreement with a new lender usually takes 4 - 8 weeks, so the sooner that you secure a deal, the sooner you can be assured of making savings. It is usually quicker if you agree on a new deal with your current lender.
What are the costs of remortgaging?
When you look to remortgage, you should be aware of the costs associated with this. There are 3 potential costs:
Exit fees - If you switch during a fixed period, there are usually fees to pay which are usually based on a % of the outstanding debt remaining. There may also be administration fees charged by the lender. These will be set out in your initial agreement/contract.
Arrangement fees - Many new mortgage agreements come with a product or arrangement fee. This fee is usually around £1,000. Most lenders will allow this to be added to the mortgage balance, enabling you to pay this over the length of your mortgage. It is important to remember that using this will mean you will pay interest on the figure - so it will cost you more in the long run.
Legal Fees - Companies such as Avery Walters remortgage solicitors will conduct essential legal services such as valuations and conveyancing, which will come with legal fees. These fees are likely to be lower than those moving into a new property altogether. Please contact our remortgage solicitors team to discuss how we can help.
Avery Walters’ residential property solicitors
If you are looking at securing a remortgage on your property, Avery Walters residential property solicitors offer conveyancing services to help you when making changes your mortgage. Call us today for a free initial consultation with our experienced team of residential conveyancing solicitors.
Our team of remortgage conveyancing solicitors can be contacted by calling our Leeds residential property solicitors team on 0113 200 7480 or Harrogate team on 01423 564551. We are ready to help you when making amends to the mortgage on your property.
* Laura Stafford is the SFE accredited memberand a full member of STEP