If you have an existing mortgage and wish to change lenders or borrow against the equity you have in your home, you may think that there is no need to instruct a Conveyancing Solicitor to remortgage.
After all, your current lender already knows you can meet your payments and if you are applying to other financial institutions, they can see that you have an exemplary credit record. However, if you are remortgaging with a new lender, having an experienced Residential Property Law Solicitor to successfully manage the conveyancing aspects of the transaction will ensure the process runs smoothly. In addition, a new lender will normally require you to have a Conveyancing Solicitor to conduct due diligence checks on your property’s legal title and run property searches.
In this article, we explain how a Conveyancer protects both the lenders and your best interests throughout the remortgage process.
What Is a Remortgage?
People remortgage to get a better interest rate on their existing mortgage or to raise extra funds for house renovations, a dream holiday, or simply to pay for an unexpected expense. When it comes to obtaining an attractive interest rate, most fixed rates only last between two and five years. After your fixed term expires, you will automatically move to the lender’s standard variable rate (SVR) of interest which is likely to be significantly higher than what you paid on the fixed rate. By exploring the market for an attractive fixed rate three to six months before your current fixed term ends, you could potentially save yourself thousands of pounds in repayments.
Do I Always Need A Conveyancing Solicitor To Remortgage?
If you remortgage with your existing lender the process is relatively straightforward, and it is unlikely you will need to instruct a Solicitor. Moving to a new lender, however, will involve a due diligence process similar to when you first bought your home. Your Conveyancing Solicitor will check your property’s legal title as well as order and analyse property searches such as water and drainage and environment searches.
The lender will conduct a valuation of your property to check the loan-to-value ratio is sufficient for it to take the risk of lending to you. They may have questions relating to the property and your Solicitor can answer these on your behalf.
If the lender makes a mortgage offer, your Solicitor will check the contract and answer any questions you have on the terms and conditions of the loan. Once the mortgage agreement is signed, they will discharge your old mortgage and register the new mortgage with the Land Registry.
Can I Remortgage A Leasehold Property?
Absolutely, however, the lender will want your Conveyancing Solicitor to run additional checks that are not required when remortgaging a freehold property, including:
- Evidence that all ground rent and service charge payments are up to date.
- If there are any major repair works planned in the near future. For example, if the freeholder plans to undertake significant renovations on the roof of the building, the lender will want to know how much you will have to contribute towards the cost of the works.
- Whether there are any ongoing disputes between you and the freeholder.
- Evidence that the freeholder has up-to-date building insurance.
You will also need to inform the freeholder of your property or their managing agent that you plan to remortgage. The lender will require a letter of consent from the freeholder before they can accept your application.
The International Monetary Fund (IMF) has recently posted a blog stating that interest rates are predicted to fall sharply once “inflation is tamed”. However, no date was given for when this would occur, and the IMF did not state whether interest or inflation rates had peaked. This means that shopping around for the best mortgage interest rate will remain incredibly important for homeowners in the coming months. To ensure your remortgage application runs smoothly and you understand the lender’s terms and conditions set out in the mortgage agreement, it is always best to have an experienced Property Law Solicitor advise you.
The residential property conveyancing team at Pearcelegal has the experience and legal expertise to advise and represent you with any property sale, purchase, remortgage, or other legal matters. To make an appointment, please contact us on 0121 270 2700 or enquire through our contact form.
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