When you remortgage, you change your existing mortgage product to another for the same property.
The new mortgage might be provided by the same lender as your previous one, or it might be with a new lender.
If you remortgage with your current lender, it is likely that the lender will consider it as a product transfer, requiring no new legal work to be carried out.
However, you may switch to a different lender who will require you to hire a licensed conveyancer to carry out checks and deal with the transfer of ownership. This is remortgage conveyancing.
The conveyancing process when remortgaging requires less work to be carried out than when buying a property, and therefore takes less time. It may be possible for your conveyancer to complete the work within three weeks.
The reason that less work needs to be carried out is that the requirements of a new lender are usually less stringent than for the first lender. Usually a new lender only requires a regulated local authority search or an indemnity policy, so there is no need for multiple searches to be carried out.
Additionally, there is no other party involved so there is no need to wait for a seller to respond to questions, or for other properties in a chain to complete beforehand.
Before you approach a conveyancer
Before instructing a conveyancer, check that his or her business is on your lender’s panel of approved conveyancers, in other words, that he or she has been approved to carry out work for the lender.
Then collect together the documents he or she will need in order to be able to work for you: documents that prove your identity, and if you’re paying off some of your mortgage, documents that prove that the money isn’t the proceeds of crime.
Documents that prove your ID
Both conveyancers and lenders are required to conduct Know Your Client checks – checks that verify your identity.
The ID of each person who will be named on the deeds to the property (and who will be responsible for paying the mortgage) will need to be checked.
You are usually required to provide your passport or driving licence, and one or more proof of address documents, such as a council tax bill or energy or water bill.
Your conveyancer is then likely to use an online ID checking service.
Documents that prove the source of your funds
If you are reducing your outstanding mortgage amount at the same time as remortgaging, to prevent money laundering, your conveyancer will check the source of the funds you are using as the deposit for the mortgage
The documentation that you will need depends on the source.
Savings - bank statements showing the accumulation of funds over time (and the source of those funds)
Property sale – a copy of the sale completion statement, a copy of the bank statement showing receipt of funds, and the name of the conveyancer who handled the sale for you (if not your remortgage conveyancing solicitor)
Pension – a letter of confirmation or statement from your pension fund manager
Inheritance – confirmation from the executors of the Will as to how much you were left and a copy of the bank statement showing receipt of funds from the executors
Sale of shares, dividends or other investments – documents that certify that the transaction took place and a copy of the bank statement showing receipt of funds
You usually cannot use cash to repay your current mortgage because it is difficult to prove that cash hasn’t come into your possession as a result of criminal activity.
Likewise, funds from sources outside the UK may be difficult to use if they are held in countries deemed to be high risk by the UK’s Financial Action Task Force (FATF) or the EU.
Checks that you are the legal owner of the property and entitled to sell
Copies of the title deeds to your property (that prove your legal ownership to and your current mortgage provider’s charge over the property) are available from the Land Registry. Your conveyancer will obtain these official copies to confirm you are the owner.
The title deeds also set out any restrictions on the property.
Restrictions and charges are rights to receive the proceeds of sale in preference to anyone else, including you.
If you are remortgaging a leasehold property, your conveyancer will check that the leasehold title meets your lender’s requirements.
The leasehold title deeds may also include covenants. These may require your conveyancer (on your behalf) to notify the freehold title owner if the charges on the property change or are repaid. In other words, if you own the leasehold, the owner of the freehold may need to be told that you are remortgaging.
Request current mortgage certificate
Your conveyancer will ask your current mortgage provider for a statement of the amount outstanding on the day of repayment. The new loan will pay off the balance of the old one.
Issue of the (re)mortgage offer
The mortgage lender will issue a formal offer to you and your conveyancer setting out details of the criteria that must be met for the loan to be advanced.
Local authority searches and indemnity policies
Most lenders only require a local authority search to be carried out. It is assumed that the original mortgage lender would have required a fuller set of searches.
When you first take out a mortgage, the searches can often be a source of delay since they rely on other organisations to respond to requests. However, with fewer required, searches for remortgaging rarely take long.
A possible alternative, depending on your mortgage lender, is to take out indemnity insurance instead of waiting for the results of a search. To arrange an indemnity policy takes even less time than searches.
Bankruptcy check and OS1 priority search
Your conveyancer will check that none of the legal owners are bankrupt. He or she will then commission an OS1 priority search.
The OS1 search prevents any other charges from being registered against the property ensuring that the registered title cannot be changed until after the remortgage process has completed.
Send certificate of title to the lender
Once evidence that all registered owners meet the new lender’s criteria and that the property is sound, your conveyancer will arrange a date with the lender to complete the remortgage.
He or she will send a certificate of title to the new lender.
Before the date of completion, your remortgage conveyancer will confirm with you the outstanding amount to be paid to complete the remortgage or the amount to be paid on completion. The statement will include the other expenses of remortgaging, including legal fees, Land Registry fees, search fees and the costs of the checks.
Once the conveyancer receives the money from the new lender, he or she will repay the previous lender and then pay the additional costs. If you have increased the size of the loan (for example, borrowing to fund improvement work on the property), then this surplus will be paid to you.
Your conveyancer will register the new charge with the title deeds at the Land Registry.
Updating the register can take several months, particularly if the property is a leasehold one, since the owner of the freehold may be required to confirm certain matters, such as whether the ground rent has been paid.