What is ‘remortgaging’?
Remortgaging is typically done when your initial mortgage deal (such as a fixed-rate period) ends, and you want to avoid reverting to your lender’s standard variable rate, which may be higher.
Do you need a solicitor to remortgage?
You are likely to need a solicitor if you are:
- Changing lenders: you will likely need a solicitor to handle the legal aspects of transferring the mortgage to the new lender.
- Switching to a new lender: If you’re moving to a new mortgage provider, a solicitor is generally required.
- Releasing equity: If you’re borrowing more money when remortgaging, you may need a solicitor for the legal documentation and additional legal steps.
- Complicated property or mortgage circumstances: If there are complex legal issues, such as shared ownership or disputed ownership, a solicitor may be necessary.
- Transferring equity: If the person(s) who have the current mortgage are changing and you intend to either add or remove persons from the mortgage, a solicitor is required for the legal documentation.
How can a solicitor help?
Here’s how a solicitor helps during the remortgage process:
Your solicitor will review the new mortgage offer to ensure that the terms are clear and that they align with your understanding and intentions. They check for any potential issues or clauses that could affect you in the future.
If you’re switching to a new lender, the solicitor may carry out necessary property searches to ensure there are no legal issues that could affect your ability to remortgage.
Your solicitor will prepare and handle the legal documentation required to complete the remortgage.
Your solicitor will pay off your existing lender and ensure that they remove their charge from the property, so the new lender can place their own charge.
The solicitor will ensure that the new lender’s security (interest in the property) is properly registered with the Land Registry.
The solicitor will arrange for the transfer of funds and ensure all paperwork is filed with the relevant authorities.
Throughout the process, your solicitor can offer legal advice, helping you understand the implications of the new mortgage terms, any fees involved, and your rights as a borrower. If there are any legal complications or issues with your property or the deal, the solicitor can help you navigate these challenges.
Things to look out for when remortgaging
When remortgaging, there are several important factors to consider such as:
Early Repayment Charges (ERCs)
If you are remortgaging before the end of your existing mortgage deal, there may be early repayment charges. Review when your current mortgage deal ends to avoid costly penalties.
Total Costs Involved
Remortgaging can come with several extra costs, such as:
- Arrangement fees: These are fees charged by the new lender for setting up the mortgage.
- Valuation fees: Lenders may require a valuation of your property to ensure it’s worth the amount you wish to borrow.
- Booking fees: Some lenders charge a fee to reserve a mortgage rate.
Stamp Duty Land Tax
Stamp Duty Land Tax (SDLT) is typically not due on a remortgage unless certain conditions apply. Here’s an idea of when SDLT might be due on a remortgage:
- Transfer of Equity: If the remortgage involves a transfer of equity (i.e., you’re adding or removing someone from the ownership of the property as part of the remortgage), SDLT may be applicable. The SDLT would be calculated on the value of the mortgage debt the new co-owner assumes, or the amount paid for the share of the property.
- Consideration in the Transaction: If there is any payment or consideration involved (e.g., one party pays money to the other as part of the remortgage), SDLT may apply based on that value.
Contact the author
This article was written by Katie Pendlebury, Trainee Solicitor in our Corporate and Commercial department. If you wish to discuss anything mentioned above, contact Katie below.