Remortgage guide
A Remortgage is when you take out a new loan to replace an existing loan on your property. This may be because you can raise extra money from your house or change to a lower interest rate. We specialise in remortgages and will make sure that you are on your new deal as soon as possible. You will start saving money quicker if your Remortgage is completed quickly.
Important points to remember
(1) Are there any early redemption penalties? We have seen cases where clients have had to pay six months worth of repayments to terminate their existing mortgage. Even so, you could still save money on your new mortgage. It's best to talk to your financial advisor.
(2) On your new mortgage is there a long tie-in period after the special offer finishes? You might be getting a discount for a few months but you might have to pay an early redemption penalty for a number of years after the special rate has finished if you pay that mortgage back.
(3) Have you asked your present lender if they will match your new offer? In some cases they will. This will save you the aggravation and costs associated with a Remortgage with just one simple phone call to your lender.
We do not give any financial advice but these points are just there to hopefully make sure that you have considered some basic but important issues.
Step1 Preparing and gathering information
Once you have instructed us to act on your behalf we can officially ask your present lender for a mortgage redemption statement which details how much is still owing on that loan. This will be paid back using the money from the new mortgage. We will also ask them to send us the title deeds.
A Local Authority Search and other Searches will be applied for and these should usually come back to us within a week. Your mortgage offer should be with us by now and we will study and review all these documents. If there are any other inquiries to make we will do so and then report back to you.
Step2 Set Completion Date & sign mortgage deed
By now we should be nearly ready to complete. We will ask you to sign the mortgage deed which needs to be witnessed by an independant person. A date will now be agreed with you for completion which should be as soon as possible so that you can start benefitting from the new deal, again, it's up to you and we will follow your instructions. An up to date mortgage redemption statement will be requested from your lender so that we don't over or under pay. We will now request the money from your new lender to arrive on completion day.
Step3 Completion day
When the money arrives from your new lender we will pay off your old mortgage immediately. We will deduct any disbursements, fees to mortgage broker (if any), our fees and other expenses then prepare a Completion Statement and return the balance (if any) to you on the same day.
You'll be surprised at the lack of action on completion day because there is no moving or collection of keys or chains etc. The only difference you'll notice is when your monthly payments are lower (if you've gone for a better rate) or higher if you've drawn out more on your mortgage). Either way, we hope you were impressed by our service.
Finally we will send to the Land Registry your signed mortgage deed with the old title deeds. They will prepare new updated ones and return them back to us. We pass these on to your new lender. Finished!
Remortgage Jargon Buster
These are some of the words that you hear regularly from solicitors, mortgage brokers, estate agents and others involved in your transaction.
Chain
This is the term used where there are more than two parties to a transaction (ie just the seller and the buyer). Chains come into being when say for example, A is selling a property to B and B is selling their property to C who is selling some other property to D. Very often chains take time to establish as one party cannot move without selling their property first. Difficulties arise as the Chain gets longer, as there is more chance for one party to pull out of a transaction, so resulting in a Chain collapsing, or the transaction taking a longer than usual until another "link" in the Chain is found.
Completion Date
Also known as completion, this is the day when you are contacted to move home. The ownership of the property transfers from the seller to the buyer. Very often buyers mistakenly assume that the estate agent sets this date. Please do not book anything before your solicitor has informed you officially of the completion date.
Only when contacts are exchanged a Completion Date is agreed. We will of course try to set a date that best suits you. Our advice is that you discuss with the buyer/seller dates which suit you both. If there is a Chain involved then we may have to accommodate other parties.
Completion Statement
Before completion day we will calculate and prepare an account for you detailing all the financial movements on your case.
If you are buying then this statement will detail how much money is required from you prior to completion. We take into account all money received from you and all money paid out or to be paid out.
If you are selling then this statement will be prepared on completion. After paying off all costs and mortgage (if any), surplus money will be returned to you on the same day.
Disbursements
Payments made by us on your behalf to, for example, search providers, HM land registry, estate agents, banks amongst others. A detailed breakdown will be on your quote and completion statement.
Early Redemption Penalty
When you get a discounted or special rate mortgage there is usually a big saving that you initially make. This saving is the lenders way of rewarding you for choosing their product and sometimes it actually costs them money to offer this to you. They do this because they know that after the offer period has finished they will start making their normal profit from you. If however you change your mortgage immediately after the special offer has finished the lender will have lost a lot of money on the mortgage they provided you. To stop this situation many lenders put in a penalty clause in the mortgage conditions. The penalty period and amount varies between lenders and you must check whether this affects you. We will also be looking out for this and will advise you accordingly.
An example is, if you had a cashback or heavily discounted rate for the first six months of your mortgage you will probably have an early redemption clause. This could say that if you pay back the mortgage within three years you will have to pay an extra six months worth of payments on top of the amount borrowed. Please check your early redemption penalty clauses on both the mortgage you are paying back and your new one.
Land Registry
The Land Registry (HMLR) is a government office that keeps records of every property as it changes ownership. Surprisingly not all properties are registered as this process started relatively recently(1925) and to register every property in the country would be a mammoth task which would take many years. We search the Land Registry database for information about current ownership and whether there are any special conditions or restrictions affecting the property.
The Land Registry is also a prime mover towards electronic Conveyancing for the future and their website is worth a visit for more information.
Local Authority Search
On behalf of the buyer and his lender we ask the local authority a list of questions. These cover things like Highways, Planning, Building Control, Conservation order, Compulsory Purchase. The search is in respect of the subject property only and not any adjoining or neighbouring properties. This means that if the house next door to the one you are buying is being turned into a pub or the road outside is to be made into a motorway THE Local Authority Search WILL NOT SHOW THIS.
We strongly recommend that you personally visit the local council departments to ask them what plans they have for the future in the immediate vicinity of your purchase.
Mortgage
A mortgage is the loan taken from a bank, building society or other lender for the purchase of your property. The mortgage is secured on the property and the mortgage company's involvement is registered with the title deeds. This means that you can not sell the property without the mortgage lenders approval or until the mortgage is paid back in full.
After your application for a mortgage has been approved by your lender you will receive a formal mortgage offer. They will also send us a copy with a list of questions and conditions that they require us to answer and comply with. They will also require you to sign a mortgage deed which is your formal acknowledgement that you recognise and accept the mortgage. The Land Registry need this deed as proof that you have accepted the mortgage.
Mortgage Redemption Statement
Redemption means paying off the mortgage. This is a statement we request from your existing lender detailing how much is remaining on the mortgage. this figure is what we pay back on completion day from your new mortgage.
Searches
Searches are a list of questions sent to organisations to make sure that there is nothing untoward with your remortgage. We must carry out the following searches, Local Authority Search, Environment Search, Drainage Search, Mining search (only some areas) and other Land Registry Searches.
Tie-in Period
The tie-in period is the difference between the time the special offer on your mortgage finishes and the end of the early redemption period. This means that you are restricted in moving your mortgage to another lender without penalties
Title Deeds
Document confirming ownership of the property which is kept by the mortgage lender until the mortgage is paid off. If you do not have a mortgage you will probably have the deeds or your bank or solicitor may have them for safe keeping. Please send to us if you have them by Royal Mail "Special Delivery".
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