DESPITE the continued restrictions due to Covid-19, there has been a rise in the number of people remortgaging their homes. And due to the low interest rates, many have been able to save thousands of pounds in the process.
There are many reasons why home-owners decide to remortgage. It could be to reduce their existing borrowing or to release money to undertake home improvements or to consolidate existing debts into one easy monthly payment.
Remortgaging has become a popular option for home owners and it seems that switching your mortgage lender is gradually becoming as normal as switching your home insurance or energy provider.
The first step for any home owner is to review their existing mortgage and to check if there are any current mortgage products out in the marketplace which suit their circumstances. This is usually completed with the assistance of an independent mortgage broker who will advise the home owner on the best product for them.
The mortgage broker will then gather together all the paperwork and submit the mortgage application to the bank. Once the application has been approved by the bank, then depending on the mortgage product, the home owner will either appoint a solicitor to do the legal work or the bank will appoint a solicitor to do this.
One of the most popular products available in the marketplace is what is called a ‘Fee Free Remortgage’ whereby the banks will pay the costs of the valuation on the property and the legal fees. There may also be a cashback offer available which makes this product very attractive to the home owner.
The solicitor will commence the legal work by seeking the title deeds to the property from the home owner’s existing mortgage lender. They need to ensure the home owner has a good and marketable title to the property which will satisfy the new bank.
It can take banks a number of weeks to release the title deeds to the solicitor so this needs to be a consideration when looking at time scales for completion. A number of searches will be undertaken to ensure the home owner is not bankrupt nor has any judgments against them.
There will also be searches undertaken to confirm all works at the property have been undertaken with the appropriate consents e.g. from the planning authority and the local council building control department. It is good practice to ensure all documentation is made available to the solicitor at an early stage to avoid any unnecessary delays.
The solicitor will also ensure the home owner has signed and completed all appropriate documentation required by the new mortgage lender e.g. the bank’s mortgage deed. This is a very important document which secures the bank’s mortgage to the property.
Once the solicitor is satisfied with the title and searches, they will then proceed to completion. A redemption statement is sought from the current mortgage lender to confirm the amount to be repaid at completion.
The solicitor will then arrange with the home owner’s new mortgage lender to drawdown funds and repay the prior lender. Any surplus monies and cashback are then paid directly to the home owner.
Throughout the process the home owner, mortgage broker, solicitor and new lender work closely together to bring the remortgage to a quick conclusion. It really is a team effort.
:: Heather Canning (heather.canning@mckees-law.com) is the remortgage team manager at McKees (www.mckees-law.com)
