What is the remortgage conveyancing process?
This article explains the conveyancing process for remortgaging a residential property. We include tips on how to speed up the process and save money.
Why do I need a conveyancer for a remortgage?
Conveyancing is the process of 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, still necessary for a solicitor to check the title and legal standing of the property. This is to ensure that the property offers sufficient security for the lender and to formally register the new interest.
The remortgage conveyancing process:
Step 1 - Verify your identity
Once you have applied for a new mortgage, your solicitor will need to verify your identity and carry out money laundering checks.
The vast majority of solicitors will now verify your identity using a third-party online service that costs around £10 per person.
COVID-19 has lead to some innovation in the process. Many firms are now asking the client to email a copy of their ID. A video call is then scheduled during which the client holds up a picture of their ID next to their face for verification during the call.
The solicitor will need to verify the identity of each person named on the mortgage and property deeds.
Step 2 - Check the source of funds
If you are paying off part of your existing mortgage, your solicitor will need to check the source of your funds in accordance with the Anti Money Laundering (AML) regulations.
The documents you need to provide funds will depend on the source of your funds. Your remortgage solicitor will provide you with details of the documents you will need, which could include:
|Savings||Bank or building society statements|
|Pension release||Pension statement|
|Property sale||A copy of the completion statement, and a bank statement proving that you have received the funds from the solicitor who handled the sale|
|Inheritance||A letter from executors confirming how much you have received, and a bank statement showing the funds were received from the executor’s account|
|Share sales or dividends||Share release or dividend certificate and proof you have received the fund from the company|
Funding sources may even be as diverse as lottery winnings and injury compensation payments.
Cash cannot normally be used to repay your existing mortgage as it can be hard to prove where the money came from. If you plan to use cash to settle part of your existing mortgage, your solicitor may be able to advise you further on your options.
What if I am remortgaging with funds from outside the UK?
It may be possible to use funds from outside the UK for your remortgage, but some solicitors will not accept funds from certain “high risk” countries.
The Financial Action Task Force (FATF) regularly update their list of high-risk countries. The EU also maintain a list of high-risk countries.
If you are using overseas funds as part of your remortgage, get advice from a solicitor as soon as possible. Check that you have, or can obtain the required documents to prove the source of funds.
Step 3 - Check HM Land Registry title deeds
Your remortgage solicitor will obtain title registration documents for your property from HM Land Registry. These title deeds (called Official Copies) confirm you are the legal owner of the property you are remortgaging.
The deeds also detail any legal charges registered against the property to protect a mortgage loan. The existing lender's legal charge over the property will be removed when the mortgage is repaid.
The solicitor will need to confirm that there aren't any other parties with a charge over the property
The leasehold title deeds may also include covenants that inform your solicitor whom to notify if the charges on the property change or are repaid. The freeholder will also need to be notified.
Step 4 - Review your mortgage offer
Your lender will issue the formal mortgage offer to your solicitor.
The mortgage offer sets out what the solicitor must do to satisfy the mortgage lender’s requirements. These requirements are set out in the UK Finance Mortgage Lenders' Handbook.
Each lender has different lending criteria. Lenders will have specific requirements for leasehold properties, such as a minimum unexpired lease term.
Step 5 - Request current mortgage statement
Your solicitor will ask your existing mortgage lender to provide a current mortgage statement.
This statement will confirm the amount required to redeem the mortgage. This outstanding balance will be repaid when the remortgage conveyancing process completes.
Step 6 - Apply for local authority searches
The Lenders' Handbook also sets individual lender's property search requirements. Most lenders will only require a Local Authority (LA) search and many will accept a search indemnity policy instead. An indemnity policy is certainly the quickest and cheapest option so ask your solicitor if you can avoid the cost of a full search.
Step 7 - OS1 priority search and bankruptcy check
Your solicitor will then take out a pre-completion search called an 'Official search with priority: whole title (OS1)'.
The OS1 search prevents any other charges from being registered against the property. This ensures that the registered title cannot be changed until after the remortgage process has completed.
Your solicitor will also carry out a bankruptcy check to confirm that none of the legal owners is bankrupt.
Step 8 - Send the Certificate of Title
Once your solicitor is satisfied that you, any other registered owners of the property, and the property itself all meet your new lender's conditions, a completion date can be agreed upon.
Your solicitor will send a 'Certificate of Title' to your new lender confirming that all matters relating to the property are acceptable. The solicitor will then request that the lender releases the remortgage funds.
Step 9 - Completion day
Before completion, your remortgage solicitor will send to you a statement confirming:
- The outstanding balance that you must pay to complete the remortgage, or,
- The money you will receive once the remortgage process completes
The statement will set out the mortgage advance from the new lender, but will also include an itemised list of other fees and disbursements incurred during the remortgage process, such as:
- Legal fees
- HM Land Registry fees
- Local Authority search fees
- ID and bankruptcy checks
Once your solicitor receives the mortgage funds from your new lender and they are ready to complete, your solicitor will use these funds to repay (redeem) your current mortgage. The funds will also be used to settle the lender's legal fees and disbursements.
If any money remains (for example, you may have taken out a larger mortgage to fund the construction of an extension), these funds will be paid to you.
Step 10 - Post-completion
After completion, your solicitor must register the new mortgage at HM Land Registry.
HM Land Registry may take some time to update the title register to reflect the new mortgage. This process can take months, particularly if the property is leasehold, but it won't affect the date your new mortgage rate starts.
How long does the remortgage conveyancing process take?
The conveyancing process for a remortgage is more straightforward than it is for a property purchase or sale. Conveyancing solicitors can usually complete the legal work on a remortgage in a few weeks.
Is COVID leading to delays?
Conveyancing solicitors, lenders, and local authorities have struggled to cope with the workload during the pandemic. A buoyant market and the Stamp Duty holiday have led to a significant increase in the number of transactions. As a result, remortgages have been taking significantly longer to complete
I am not moving home so why does speed matter?
Although you are not moving house when remortgaging, speed is still vitally important as:
- The sooner you complete, the sooner you benefit from the new interest rate. (it could save you one or two 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.
How can I save time and money?
Tell your lender you want to complete quickly
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.
Avoid 'free legals'
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.
Ask if your solicitor if you can forgo searches
Some solicitors order searches by default - even when the lender doesn't need them. Unless the lender specifically requests searches, this is a waste of time and money. Ask your solicitor to apply for search indemnity insurance instead and save yourself up to £300.
Searches can also take weeks to obtain, whereas search indemnity can be arranged instantly.
Your next step
Whether you are gifting a property to a child, getting married or separating, or transferring equity for any other reason, we can help you find an expert conveyancing solicitor. Even if you are just looking for advice, we can help.
If you are also planning to remortgage as part of the transfer process, the remortgage legal work can be completed at the same time as your transfer of equity.
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