Remortgage conveyancing
Remortgaging does involve legal work as part of the process. Although less complex than applying for your original mortgage, it does require the support of a solicitor or conveyancer to do the work. Let’s take a look at the remortgage conveyancing process, including everything you need to know when you’re thinking about applying for a remortgage deal.
What is conveyancing?
Remortgage conveyancing is the legal process of transferring property from one lender to another. A lender will require a licensed conveyancer or property solicitor to carry it out. It ensures that the new lender has their charge properly registered against the property being remortgaged, and the previous mortgage is paid off.
Do you need a conveyancer when remortgaging?
If you’re taking out a new deal with your current lender, then it’s considered a product transfer and doesn’t require any additional legal work. This means you don’t have to use a conveyancer or solicitor.
However, if you’re remortgaging with a new lender, you’ll need remortgaging conveyancing. A solicitor or conveyancer will carry out checks on behalf of your new lender and make sure that the new mortgage is registered against your property at the Land Registry.
The remortgage conveyancing process
So, what is the process for conveyancing when it comes to remortgaging? And how long does it take? Here are the main steps you need to know.
Step 1: Identity checks
The first step of the process is for your solicitor to verify that you are who you say you are. This is usually done after you’ve applied for the remortgage - even if you’ve already had your identity verified by your new lender, your solicitor will want to carry out their own checks. These will need to be done for each person named on the mortgage and property deeds.
Step 2: Check your current mortgage
If you’re using some of your own funds to pay off part of your existing mortgage the solicitor needs to check the source of your funds, in line with anti-money laundering regulations. The documents you need to provide will vary depending on the source of your funds, and your solicitor will let you know what they need. This could be your bank or building society statements, your pension statement or a copy of your property completion statement if you’re selling another property.
Step 3: Check the title deeds
Your solicitor will then need to check the title deeds for the property from the Land Registry. These documents are called Official Copies and confirm that you are the legal owner of the property you’re looking to remortgage.
The deeds note any borrowing (for example, secured loans) registered against the property – known as legal charges. Your existing lender’s legal charge will be removed when the mortgage is repaid. If any other charges are to remain in place after the remortgage goes through you’ll need the second charge holder to agree to a ‘deed of postponement’ before your new mortgage can complete. If this is the case, there is usually an additional legal cost to arrange this. Whilst your solicitor will do the heavy lifting when it comes to a deed of postponement, you will have to start the process by informing your solicitor about the second charge as early in the process as possible.
If you own a leasehold property, at this stage, the solicitor will check the title deeds to make sure that the leasehold title meets the requirements of your new lender.
Step 4: Review the remortgage offer
The next step is then for your solicitor to review the lender’s formal mortgage offer. The offer sets out what the solicitor needs to do to satisfy the mortgage lender’s requirements.
Step 5: Request your current mortgage statement
Your solicitor will get your current mortgage balance from your mortgage provider in the form of a Redemption Statement. This should confirm the amount needed to pay off the mortgage at the end of the remortgage conveyancing process.
Step 6: Apply for searches
Your solicitor will now apply for property searches, which act as a background check on the home and the surrounding land. These ensure there are no hidden issues such as planned major roads nearby, flood risks, or historical land contamination that could affect the property's value.
Most lenders require a Local Authority search for this. However, many will accept a Search Indemnity Policy instead. This is essentially an insurance policy that protects the bank or building society against any 'hidden' issues that a search would have found. It’s worth asking your solicitor if this is an option for you.
Step 7: Pre-completion check
Another check that needs to be carried out by your solicitor is called an ‘Official search with priority: whole title (OS1)’. This prevents any other charges from being registered against your property, ensuring that the title can’t be changed until the remortgage process is finished.
Step 8: Bankruptcy check
At this point, your solicitor will also carry out bankruptcy checks to make sure that none of the people named in the deed is bankrupt.
Step 9: Certificate of Title
When your solicitor is satisfied with all the checks a completion date can be determined. Your solicitor will send your new lender a ‘Certificate of Title’. It confirms that all the checks were satisfactory and your solicitor will request that your lender releases your remortgage funds.
Step 10: Completion
You’ll receive a statement from your solicitor before completion. It will either confirm the outstanding balance that needs to be paid to complete the remortgage or the money you’ll receive once it’s completed, if you’re raising extra money.
They’ll also send an itemised list of all fees and disbursements, such as:
- Legal fees
- Land Registry fees
- Local Authority search fees
- Bankruptcy checks
Once your solicitor receives the funds from your new lender, they’ll use the money to repay your current mortgage and settle the above fees and disbursements.
If you’ve taken out a larger remortgage for home improvements or other reasons, you’ll then be paid the remaining funds directly.
Step 11: Post-completion
After completion, your solicitor will register the new mortgage with the Land Registry. This can take some time to update, especially if you have a leasehold property.
What is a remortgage valuation?
Thinking about remortgaging your property? Getting an accurate remortgage valuation on your home is an important part of the process.
At its simplest, a mortgage valuation is a way for a lender to confirm the value of property that you’re planning to remortgage. Also called a valuation survey, it is the same process that the lender followed when you bought the property.
Doing a home valuation for a remortgage confirms the property’s value, that it provides suitable security for the loan and determines the loan-to-value (LTV) ratio. The LTV is the amount you borrow in relation to the value of your home and determines the mortgage rates you are eligible for.
What does a remortgage survey involve?
When it comes to buying a home there are four main types of survey:
- A mortgage (or remortgage) valuation survey
- A condition report
- A homebuyer report
- A building survey
The type of survey will depend on factors such as your home’s location, how old the property is and whether there’s anything unusual about its construction.
However, when it comes to getting a house valued for remortgage a basic valuation is usually all that the lender will require. In some cases, a qualified surveyor will visit your property and put together a short report. In other cases, they will perform what’s called a “desktop valuation”. This is when surveyors use recent sales data from similar, close-by properties to calculate the value of your property. Sometimes, the surveyor may also do a “drive-by valuation”, which just involves seeing the property from outside.
The cost of completing a house valuation for remortgage is usually based on the price of the property and can range between £150 and £1,500. However, lenders often offer free valuations as part of their remortgage deals, for which they often use desktop valuations.
What happens after a property valuation for a remortgage?
After your remortgage valuation, the surveyor will give their assessment of the value of the property to your mortgage lender. If they agree on the remortgage valuation, and nothing is flagged as an issue the remortgage process will continue as normal.
Your remortgage valuation will also show you your current loan to value (LTV) ratio. Your LTV is the size of your mortgage compared to your property’s value. So, if your home is worth £200k and your outstanding mortgage is £150k, your LTV is 75%. In general, the lower your LTV, the lower your interest rate – and the wider your choice of mortgage deals.
Sometimes, after getting your house valued for remortgage, a surveyor may conclude that the price is higher than the property’s actual value. When this happens, it is called a “down valuation”. If it occurs, your lender may want to reconsider the details of the remortgage offer and could either change the rate they are prepared to offer or reduce the loan amount available.
A surveyor might down value a property for a number of reasons. Some of the most common reasons include overstating the value on the application form or structural problems with the property.
If you're faced with a down valuation from your lender and are unsure of your next step, don’t panic as there are still pathways available to you.
The first step should be to talk to your adviser. They may be able to send you the report which details the valuer’s findings and supporting evidence. It’s a good idea to carefully look through this to see if there’s anything you disagree with or would like to question.
For example, if you feel the comparable properties the surveyor has used for their report are not similar to yours, you can send examples of other properties that you feel would be more suitable for comparison.
There are also ways to avoid a down valuation in the first instance and keep your remortgage on track.
How can you avoid a down valuation?
To avoid a down valuation, you’ll want to do some research ahead of time so you have a good idea of what your property is worth. To do this, consider the following steps:
- Do some research online into how much properties, similar to yours, in the area have sold for over the past three to six months.
- A local estate agent may be able to give you a guide you on the likely valuation
- Remember that the valuer will be looking at the property in its current condition, so won’t be considering that you’ll be putting in a new kitchen for example.
Remortgage valuation tips
If you are planning to remortgage your property and want to switch to a better mortgage deal, here are some remortgage valuation tips worth keeping in mind:
Be sensible with your valuation estimate
Whilst next door might have been on the market for a record amount for your street, bear in mind that what was listed as the price on the estate agents website might not have been what it sold for. When a surveyor carries out a home valuation for remortgage they are looking at what similar properties in the area have sold for rather than what they were on the market for. There are some helpful tools online where you can check recent sale prices in your area.
Work with an experienced mortgage broker
It is always a good idea to work with a knowledgeable mortgage broker like L&C. Our expert mortgage advisers have expert market knowledge and insight into the best ways to approach your remortgage. Based on your specific requirements and circumstances, your mortgage broker will be able to suggest the best options if you’re worried about getting your property value right on your application.
