Remortgage Legal Steps & Why It Takes Time

Remortgaging is when you change mortgage lender. It is not instant. There is a legal process to follow and this involves compliance and due-diligence. This takes time. Additionally your Conveyancer must adhere to your new lender’s requirements. Each lender differs slightly with some being more particular than others. A number of lenders are now extremely risk averse and require various issues to be referred by your Conveyancer.

Lender Referrals

Completion cannot occur until any lender referral is signed off. It is also important to bear in mind that the mortgage offer being issued does not mean that completion is imminent. It does not even guarantee that you will receive the funds. On completion your Conveyancer is saying to the Bank that the property is good security for the loan and that they are not aware of any circumstances which contradict your mortgage application forms. To do this your Conveyancer must check your title deeds and Client Care Documents. Any issues must be remedied before completion of the remortgage.

Structural Soundness & Alterations

Your property must also be structurally sound and there must be evidence of Planning Permission and Building Regulations Consent for any alterations made. This is another reason why lenders carry out valuations before issuing Mortgage offers.

Buildings Insurance

You must also be adequately insuring the property. It should not be under insured. The rebuild value must be covered and often the lender’s interest needs to be noted. You will breach the mortgage terms and conditions if you are not insuring and lenders can seek to repossess for serious breaches. If the property is damaged and not insured, this affects the lenders security.

Transfer of Equity

If there is a change of names required then a transfer of equity will need to occur simultaneously. This is where the names on the deeds do not match the names on the new mortgage offer and the deeds must be updated via a TR1 Transfer Deed. See my article on Transfer of Equity for more information on this process.

Lender Terms & Conditions

Your lender has terms and conditions which must be followed and you need to be aware of the conditions set out in your mortgage offer. You should read your mortgage offer and make sure you understand it. Discuss it with your Conveyancer and your financial advisor if you are not clear on all of the terms.

You must comply with the mortgage conditions and it helps your Conveyancer greatly if you provide the necessary documentation referred to in your offer. There will be specific terms and conditions within the mortgage offer. This may include for example, the repayment of credit card debts or repayment of a mortgage on another property you own. It can even include carrying out specific works or repairs before completion.

Be PROACTIVE and assist your Conveyancer. This will save time. Don't forget your Conveyancer has no personal knowledge of your property and cannot complete without your assistance.

You can help by providing your buildings insurance, copies of Tenancy Agreements, evidence that credit cards have been repaid, membership of Rent Smart Wales, copies of Planning Permissions & Building Regulations for alterations and so on.

Redemption Statement

You must also provide your Conveyancer with your existing lender’s reference or mortgage account number so they may obtain your redemption figure. This is the sum that repays your existing mortgage. You will need the new mortgage advance to clear the old mortgage redemption figure plus the interest and any Early Repayment Charge. Your existing lender will issue a document which we call a redemption statement and this gives the repayment figure.

Leasehold Properties

If the Property is Leasehold your management company, or companies, (who take receipt of your ground rent and service charges) will have post completion requirements and will need Notices served to indicate who the new Mortgage Lender will be. They will also charge admin fees for the Notices and it is vital you provide your Conveyancer with full details so that they can deal with the same. If you do not provide this information upfront, it is possible that following completion you will need to pay Notice fees. These would not have been known about at the time of completion.

Your remortgage will complete much quicker if you provide all necessary information at the outset.

See below my Remortgage Guide

REMORTGAGE GUIDANCE NOTES

While we make every effort to complete your remortgage as soon as possible there are various steps which must be carried out. 

These are:

1.       For every new matter we must send you our Client Care and terms and conditions. Within the same, we will ask you about alterations at the property and your buildings insurance.

2.       Please complete, sign and return our Client Care forms. These are required for regulatory purposes.  We are heavily regulated and cannot dispense with this. We need your monies on account and must hold your original ID documents or satisfactory AMl checks and proof of address to be fully instructed.

3.       Suitable ID includes your original passport or photocard driving licence and original recent utility bill or bank statement.  ID can also be verified by another solicitor or regulated IFA or mortgage broker. AML checks are obtained from specific online providers.

4.       We must obtain your deeds and lender(s) redemption figure(s). Your redemption figure confirms how much you owe the lender. To obtain this we need your lender(s) address and your account number or reference.

5.       We will order office copies of the registered title from Land Registry. Office copies evidence the title to your property.  We will also order any lease or historic filed deeds referred to.  These may contain onerous or adverse  clauses.  We must review these deeds and documents and ensure they are not going to affect property value or the lender's security. These documents can be long, complex and written in legal terminology. Therefore, this takes time.

6.       If any title defects are revealed they must be resolved before completion of the remortgage. This will delay your matter but it is vital for future proofing.

7.       Please provide a copy of your building insurance policy.  This MUST cover, as a minimum, the property rebuild value.  Please have your lender’s details noted on your buildings insurance.

8.       We must receive a copy of your lender’s valuation.  We will review this to ensure there is no undervalue, or any alterations which required Planning Permission or Building Regulation Consent (“PLP & BRC”).  Lenders do not always provide the lender valuation to your Conveyancer.

9.       Please provide us with all Planning Permission and Building Regulations for any alterations you have carried out.  In some circumstances Indemnity Insurance for missing Planning Permission &/or Building Regulations Consent can be obtained.  We will discuss this at the relevant time.

10.    Upon receipt of your mortgage offer we will review this, report to you and request that you sign the lender’s mortgage deed. This deed grants the lender a charge over your home. Your home is security for the mortgage loan. You may be repossessed if you repeatedly miss payments.

11.    Your property must be owned by the same parties who are the borrowers stated within the mortgage offer.

12.    We must hold search results (local) or "No Search Indemnity Insurance". Your local search can take a fortnight, or longer during busy times.  Hopefully your lender accepts search indemnity insurance as that is usually quicker.

13.    We can usually request your mortgage advance from your lender at this point.  Bear in mind that most lenders insist on 3 to 5 working days notice.

14.    Prior to completion the lender requires us to carry out final searches at Land Registry.  As long as these are clear we can proceed to completion.

11.  On completion you may pay Land Transaction Tax or Stamp Duty Land Transaction Tax. This is applicable if there was a change of names on the deeds.

12. We register the remortgage at Land Registry for you. However the Registry can take many months (even years) to complete a registration.  A copy is sent to you when we receive the completed registration.