A remortgage is much less hassle than buying a new home because the ownership of the property is already registered in your name. Many homeowners elect to change to a different mortgage with their exiting lender and in this case the process is even simpler.
If the borrower does decide to switch to a new lender, there are still fewer hurdles than arranging a brand new mortgage. All lenders will require a valuation to guarantee the value of the property is sufficient for them to lend on – obviously in a falling market such as we have now this can affect homeowners who borrowed at or near to the maximum level. Property prices can change quickly and are often dependent on local as well as national issues so that, even if you're remortgaging after 12 months there can still be significant change in market value of the property.
There is a requirement to make an application to the lender (new or existing) as when buying a property. This application will need to be underwritten by the lender – in all circumstances they will require evidence that the current mortgage has been maintained and that payments have been received. At this point the prospective remortgager will issue the borrower with a quote.
There are fewer costs in remortgaging than when initially buying a property as in most cases the following charges are either irrelevant or are lower than when the mortgage was first arranged. For example:
1. There is no liability for Stamp duty when remortgaging (unless a transfer of title is involved).
2. The legal fees will be lower as the process is simpler than for purchasing.
3. It is also highly unlikely that you will require a homebuyer's report or survey, especially if you remortgaging not too long after the original mortgage was agreed.
There can be other costs laid out below but on some
remortgage deals the new or existing lender will often meet some or all of these:
• Broker fees.
• Lender's arrangement charge.
• Early redemption fees.
• Valuation fees.
• Legal costs.
• Lender's arrangement charge.
• Sealing fees from the former lender.
Conveyancing must be organised and lenders often select firms of solicitors with two or more partners. During this process local searches will be arranged and the reports and title will be sent to the new lender.
Lastly, the solicitor’s duty is to guarantee the former lender is repaid when the new lender releases the new mortgage funds. Any surplus will be released to the borrower after completion.
