Like when you buy or sell a place, the legal part of remortgaging is known as conveyancing and you’ll need a conveyancer or solicitor to do the job. The process is simpler than with a purchase or sale, but still involves important steps that take at least a few weeks. Read this guide ahead of time to make your remortgage as smooth as possible.
Step 1: Verifying your identity
After you’ve applied for your new mortgage, your conveyancer will have to run anti money laundering checks and verify the identity of each person named on the mortgage and property deeds. Lots of conveyancers use external companies to do this for £6 - £25 per person.
Step 2: Checking the source of funds
If you’re paying off a chunk of your existing mortgage, your conveyancer will have to check where the money is coming from (because of anti money laundering rules). It’s completely normal and you’ll be told what documents to provide, it might include things like:
- A bank statement
- A pension statement
- A letter from executors of a will
- A dividend certificate
Step 3: Checking the title deeds
Naturally, your conveyancer needs to check that you actually own the place! They do this by getting the title deeds from the land registry (these are called official copies). The official copies explain whether anyone has something called a legal charge (a debt or loan) registered against the property.
Your existing lender will be listed (until the existing mortgage is repaid), and it’s the conveyancer's job to check that there’s no one else. If you’re remortgaging a leasehold property, the conveyancer needs to check that the lease is fine under the new lender’s criteria. They’ll also find out who needs to be told about the remortgage like the landlord and the freeholder, sometimes these third parties charge fees for doing the admin around changing yours and your lender’s details on their systems.
Step 4: Reviewing your mortgage offer
The lender you’ve chosen will send a formal mortgage offer to your conveyancer. This tells the conveyancer what they need to do to meet the lender’s requirements.
Requirements vary lender to lender, and also vary between freehold and leasehold properties (like sometimes lenders want to see a minimum number of years left on the lease).
Step 5: Asking for a current mortgage statement
Your conveyancer will ask your current lender for a mortgage statement. This will lay out how much is left to pay on the mortgage (with interest) and any fees that need to be paid (like an exit fee). This statement is settled by your conveyancer when the remortgage process is completed.
When you pay off a mortgage before the end of the term to sell a property or remortgage, it’s called redeeming your mortgage. So you might also hear this current mortgage statement referred to as a redemption statement.
Step 6: Applying for local authority searches
Don’t worry, most lenders won’t expect you to apply for all of the same searches you sorted when you bought the place.
They’ll probably only need a local authority search, and some will even accept search indemnity insurance. This is a policy that lets everyone crack on without searches. It’s the cheapest and quickest route but bear in mind, not all lenders accept indemnity insurance.
Step 7: Pre-completion and bankruptcy searches
This is when your conveyancer runs a search called an official search with priority: whole title (OS1). It sounds boring but it’s actually pretty exciting. It stops anyone changing the title by registering any legal charges against the property until the remortgage is done. You’re on the home straight.
At this point, your conveyancer will also run bankruptcy searches on anyone that owns the property.
Step 8: Sending the certificate of title
Once your conveyancer is happy that you and the property meet the new lender’s criteria, a completion date is chosen. They send something called a certificate of title to the new lender and ask them to release the funds.
Step 9: Completion
Your conveyancer will send you a statement which includes one of two things. Either the outstanding balance that you have to pay to complete the remortgage, or the amount you’ll receive when the remortgage completes.
You’ll see the amount the new lender has agreed you can borrow (called the mortgage advance) and you’ll also see any fees and third party costs (called disbursements) from the remortgage process, like:
- Legal fees
- ID and bankruptcy checks
- Land registry fees
- Search fees
Once the conveyancer gets the money from the new lender, they’ll use the money to repay (or redeem) your current mortgage and settle the fees mentioned above. If you remortgaged to borrow more, this money will be sent to you.
Step 10: Post-completion
Finally, your conveyancer will remove the old lender’s charge and register the new mortgage with the land registry. It can take a little while for this to be updated (particularly if the property is leasehold), but this won’t impact the date your new mortgage rate begins.
At Habito, we can help with the whole process. Get started here.