The essential conveyancing guide for remortgaging in 2018
Conveyancing is the process involved in transferring the legal title of a property from one person to another. Although the title (ownership) of the property does not change hands, the extent of the lender's interest in the property, or even the lender itself, does.
It is therefore necessary for a solicitor to check the title and legal standing of the property to ensure that it offers sufficient security for the lender, and to formally register the new interest.
This article exlpains the remortgaging conveyancing process and offers tips on how you can save time and money when remortgaging.
The remortgage conveyancing process
Although you are not actually moving house when remortgaging, speed is still of the important as:
- The sooner you complete, the sooner you benefit from the new interest rate. (it could save you one or 2 payments at your previous higher rate!)
- You release any equity sooner so if, for example, you are paying off other loans, a faster completion could help you avoid some more expensive interest payments.
Once you have chosen a lender and mortgage product you will need to instruct a solicitor.
- The lender may offer 'free legals'. However there are often additional fees tacked on for additional work. These can quickly add up to more than a fixed fee service from an independent solicitor.
- Some lenders are now offering 'cashback' to borrowers as a result of the delays being caused by free legals. Ask your lender whether they offer this.
Lenders earn a referral fee for the remortgage work they introduce to solicitors. Solicitors don't earn a lot from lender introduced work so service levels are usually compromised. Delays of months are not unheard of. To read more about the ongoing delay problems with 'Free Legals' see: 6/11/17 Mortgage Strategy Magazine: Free Legals delays in spotlight again.
The solicitor will send you an introductory package of documents containing their terms and conditions, an instruction form and a mortgage questionnaire. There should also be a form relating to leasehold (if applicable) which will request details of the freeholder/landlord.
The solicitor will also need to verify your identity (unless your mortgage broker has forwarded this to them already). You may need to provide your passport or driving licence.
You should receive login details for online case tracking (if offered)
The solicitor will obtain title deeds from the HM Land Registry.
If you are moving your mortgage to a new lender, a mortgage valuation will be carried out to verify that there is adequate security to protect the lender's interest.
The lender won't necessarily assume you want to complete asap. Contact the lender and ask if you can book the earliest possible valuation survey.
Your lender should send your mortgage offer directly to your solicitor as well as a copy to you.
Don't assume that the solicitor has received the mortgage offer - send a copy of yours ASAP
On receipt of the mortgage offer, the solicitor will apply for search insurance or searches. The mortgage offer will verify whether the lender accepts search insurance. Most lenders do accept insurance but a few still require a full pack of searches such as a local authority search.
Some solicitors still insist on full searches even when the lender doesn't need them! Unless the lender specifically requests these, this is a waste of the client's time an money. Ask your solicitor to apply for search insurance instead and save yourself up to £300!
The solicitor will ask the lender for an initial redemption statement which shows how much it will cost to pay off the old mortgage. A revised figure will be pbtained just befor completion.
A completion date will be set
The solicitor will ensure that the lender's lending criteria are complied with
The solicitor will formally report back to the lender
The solicitor sends you the mortgage deed to be signed.
The solicitor will request funds from the lender.
The redemption figure is reconfirmed.
The original mortgage is redeemed
The residual balance is forwarded to you
The lender's interest will be registered or updated at the land registry in the form of a charge. This means that, in the event of a sale, the mortgage will be paid off before you receive any of the sale proceeds.
The lender will write to you to confirm monthly payment amounts and dates.
The underlying conveyancing process has not really changed for decades.
Technology has introduced a number of efficiencies. As long as you choose the right solicitor, you will at least not be affected by the slowest partty in a long chain.
However, the conveyancing process for remorgaging a property has been impacted by a number of issues that are becomimg more pronounced in 2018.
'Free Legals' (where the lender includes the conveyancing and passes it to one of its panel solicitors) has had particularly bad press. Major delays have resulted from free legal offers as then solicitor is expected to 'pile it high and sel it cheap'. Lenders have expected solicitors to complete the work at an uneconomical level. As a consequence solicitors have had to carry a much higher file load and reduce service and communication levels accordingly.
As a result, stories of people waiting 6 or more months for the conveyancing are not uncommon.
Some lenders are cutting their losses and offering cashback to homeowners wanting to choose an independent solicitor. If this is an option (and you may need to ask the lender) you should seize it with both hands. This will enable you to choose a solicitor who can act in your intersts and isn't burdened with the same lender pressure.
If cashback is not an option - it will almost certainly (for the arguments set out above) be in your interests to choose an independent solicitor.