Remortgage – Refinancing Your Property
This guide has been designed to help you understand the legal aspects of remortgaging your property.
It explains the role of your conveyancer in working with your new lender, redeeming your existing mortgage, and ensuring the remortgage completes correctly and efficiently.
The guide also includes helpful information on timescales and what is required from you during the process.
If you have any questions about your remortgage, the conveyancing process, or your legal costs, please do not hesitate to contact us.
Your Remortgage
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Your conveyancer will act for you and your mortgage lender, if applicable, in carrying out all the necessary legal and administrative work involved in your house remortgage. Your conveyancer will carry out a series of checks on your behalf including a review of the legal title, your mortgage offer, your redemption statement and more. It is their role to highlight any potential issues that may affect your new lenders security.
Once your transaction has completed, your conveyancer will be responsible for registration at the Land Registry
If you are remortgaging a flat or a maisonette it will almost definitely be leasehold. There can be substantially more legal work required for leasehold properties and we therefore charge an additional leasehold fee, which should be included in your Legal Cost Estimate. For this reason, the timelines for leasehold transactions also tend to be longer.
Your case handler will review the lease and let you and the lender know if there is an issue with the term or a legal issue that needs to be addressed. It is important that you read and understand the terms of the lease as you will be bound by these during your ownership of the property.
We will often need to inform your landlord of the change of mortgage lender once you have remortgaged the property.
The landlord will usually charge a fee for the administrative work involved called a ‘notice fee’, which will vary with each property but is usually between £50 – £300. We will also charge a standard additional fee for our work in preparing each notice.
If your remortgage is attached to a transfer of equity, we will need to carry out our due diligence against either the transferor/ transferee. We will need to have the information to hand in respect of ID and Source of funds relating to this element of the transaction, together with details of the solicitor representing the Transferor/ Transferee as soon as possible to progress the transaction.
In the vast majority of remortgage cases we will undertake Title and Search Indemnity Insurance as opposed to obtaining searches and making enquiries in relation to the transaction premises. We implement Indemnity Insurance in relation to remortgage transactions in order to ensure that your property transaction proceed as quickly as possible and in order to keep the costs of the transaction to a minimum. By instructing us to act on your behalf you are providing us with authority to implement Search and Title Indemnity Insurance on your behalf.
We would recommend a Defective Title and Search Indemnity Insurance policy via our recommended insurance provider and we will provide you with a copy of the policy on request. Whilst we are satisfied that this is a comprehensive policy, you are free to take your own advice as to whether or not a more suitable or cost effective policy is available in the market place in this respect.
The costs associated with the provision and implementation of the Indemnity Insurance policy are usually between £35.00 – £100.00 plus VAT. Your Conveyancer will discuss with you the specific costs depending on your transaction and requirements.
By instructing us you are authorising us to implement the above Indemnity Insurance and any other Indemnity Insurance as and when we deem it appropriate in order to comply with the terms of your Offer of Mortgage. Please note that no warranty is given as to the effectiveness of any Indemnity Insurance provided by ourselves on your behalf in this respect.
In the event that you require any additional information in this relation to the Title and Search Indemnity Insurance Policy please do not hesitate to contact us in this respect.
Your New Mortgage
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A mortgage offer is official confirmation from a lender, typically a bank or building society, that they have agreed to lend you the amount you need to buy a property. By the time you have instructed a conveyancer, you will usually have explored available mortgage options, have a decision in principle or even your mortgage offer in place. We recommend sorting mortgage finance as early as possible to avoid any delays.
The majority of lenders use secure online Mortgage Portals to enable them to transact safely and efficiently. If your lender uses a portal we will be required to update this portal throughout the transaction and we will also be provided your mortgage offer securely through this also. The Mortgage Portals charge Administration Fees for the use of the Portal which you may need to pay. The Mortgage Portal Administration Fee will vary in accordance with the Mortgage Lender Portal that you are using and we will also charge a small supplement for our time in managing the Mortgage Portal during the course of your property transaction. The Mortgage Portal Administration Fee and our fees in this respect will amount to between £15 and £50 plus VAT and the total cost to you in relation to this service will never amount to more than £60 inclusive of VAT. We will advise you of the cost of any potential Mortgage Portal Administration Fees in your completion statement.
Your mortgage lender will request the details of your conveyancer and will send us a copy of the mortgage offer. We will then review and report to you on the terms of the mortgage offer to ensure that you have read and understand them. Your conveyancer will also tell you about any special conditions which need to be satisfied and ensure that you understand the potential penalties if you decide to pay off your mortgage early.
Convey Law will give no warranty or advice with regard to the suitability of the terms and conditions of your mortgage and it is your responsibility to comply with the conditions of the mortgage offer. If you have an interest-only mortgage it is “your responsibility” to ensure that you are able to repay the debt at the end of the mortgage term.
Please note that Convey Law is not regulated to provide financial advice and therefore cannot comment or advise on any of the terms within your mortgage offer. You would need to address this with your Mortgage Broker or with your lender directly
A mortgage deed is a legal document that gives the mortgage lender a security interest in the property. By signing the mortgage deed, you confirm that you have understood the terms and conditions of your offer of mortgage. If you fail to make repayments under your mortgage, your mortgage lender may take steps to repossess the property.
If you are purchasing with a mortgage, you will need to inform us of any persons over 17 years of age who will also be living at the property. The occupier will need to complete an Occupier Consent Form which confirms that they will vacate the property in the event of a repossession. We charge an additional fee for our work in arranging the signature of the form.
Your mortgage lender will require an independent valuation of the property to make a decision to lend. The Valuation Report is usually
for the sole benefit of the mortgage lender but is sometimes included in the mortgage offer. It provides a basic open market valuation of
the property, and whilst it will comment on the condition of the property, it will not highlight any structural issues.
Your Existing Mortgage
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You have a legal responsibility to make all monthly payments on your existing mortgage until we have notified you of completion. Do not cancel your arrangements for payment, such as Direct Debits, until after we have confirmed completion of your property transaction.
Mortgage lenders provide redemption statements to us on the basis that you will make all required payments prior to completion. If you fail to make any required payments prior to completion, there may then be a shortfall on your mortgage account. The debt will remain your legal responsibility and it will continue to incur interest. Your lender is likely to refer your details to credit reference agencies until the debt is cleared
On completion of your transaction we shall endeavor to redeem your mortgage on the specified completion day. You will appreciate that there may be occasions when it is not possible to send funds to your mortgage lender upon the day of completion. In the event that we believe that completion may be late in the day and we may be unable to redeem your mortgage, we will calculate and pay an additional day’s interest to your current mortgage lender to ensure that the payment is correct. This will ensure that there is no shortfall on your account in the event that there is an unforeseen delay. If there is an overpayment, your Mortgage Lender will refund any overpayment directly to you or if it is sent to us we will forward the return payment onto you.
What happens on the completion day?
On the day of completion, we will receive the mortgage funds in from your new lender, once we are in receipt of those, we will transfer the required amount to pay your existing lender the amount required to redeem that charge.
Our post completion team will send an application to the Land Registry to remove your existing lender and to register the charge of your new lender. If your property is leasehold, any notices required will also be made at this time.
Due to extreme delays at HM Land Registry, it is currently taking 6-9 months from the date of completion to register your interest at the Land Registry on regular applications and in excess of 12 months for applications on New Build or Unregistered properties. If you require a copy of the registered title deed to be sent to you, an additional fee will be payable.
Your conveyancer will complete and submit your Stamp Duty Land Form electronically following completion.
Please note that whilst we will complete your Land Tax Return, no responsibility will be accepted by Convey Law in respect of the information contained in the Land Tax Return documentation. It is your responsibility to ensure that the information which is contained in the Land Tax Return is correct, before exchange of contracts. You will be liable to prosecution from HM Revenue and Customs/Welsh Revenue Authority in the event that you have failed to disclose information which may be relevant to the assessment of Stamp Duty Land Tax.
The Land Tax Return together with any tax due must be forwarded onto HM Revenue and Customs/Welsh Revenue Authority within 14 days of completion of your property transaction. Failure to do so will result in a £100.00 fine with a further £200.00 fine after a three-month delay. After a 12-month delay, a fine equivalent to the Stamp Duty payment may be levied. Late payments will also attract interest. No responsibility will be accepted by Convey Law in respect of any surcharges which are levied by H M Revenue and Customs/Welsh Revenue Authority in this respect
Will my file be archived?
All client’s files will be retained and electronically stored following completion and will be retained for a period of 6 years on a sale transaction or 15 years for a purchase or Remortgage transaction as per our regulatory requirements. Electronic copies of your transaction file are useful for future reference. Clients have the option of paying a fee on completion of £45.00 plus VAT to receive an electronic copy of their Transfer Deed following completion. Alternatively, clients may request a copy of their file of papers from our Electronic File Archive facility at any point in the future at a cost of £150.00 plus VAT per file.
Conclusion
It is our policy at Convey Law to provide you with a service of the highest standard at all times. We hope that this guide has answered many of your questions relating to your property transaction. If you have any further questions, please do not hesitate to contact us. We accept the signature on your Welcome Pack as consent to all of the terms and conditions outlined in this document.