We see much in the news at the moment of mortgage rates, and often, it leaves homeowners with a headache. Not sure whether to stick where they are or move to a new lender, the minefield of mortgage options makes it a confusing time when a deal is approaching its end. Even moreso when you take into account that in Q1 of 2024, 43% of mortgages were initially fixed at under 2%*, and now the same product could be seeing rates of more than double.
Both options have their merits, but the ultimate goal is to save money, and sometimes that has to be done with a new lender. Lenders are competing for custom but some offer more favourable rates than others. This sees many looking at remortgaging and leaving their current lender behind, but this shouldn’t be rushed into. Fees you didn’t expect could be just around the corner.
If you remortgage and move to another lender, you’ll need a solicitor to help make this happen and that can cost a considerable sum. If you remortgage but stick with the same lender, you won’t.
Why don’t I just remortgage with my current lender?
If you choose to stick with your current lender when your mortgage term ends and take a new rate or deal, you’ll be remortgaging but with a difference. Opting to stay with the same lender but on a new deal is known as a product transfer and won’t require the legal work a solicitor is hired for. You’ll also only be limited to their range of mortgage products which could work out more expensive than others currently available.
Why do I need a solicitor when I remortgage?
Where a product transfer has no legal work required, remortgaging does. Moving from one lender to another requires a transfer of the title deeds from the current lender to the new one. For this, you need a solicitor.
The fees for this can vary but you might be pleased to know that many lenders remain fully aware of people not wanting to spend additional funds. As a result, many offer a free service within their remortgaging deals that offer you the use of their appointed solicitor free of charge. It would be advisable to seek remortgaging advice from a specialist advisor or broker before committing to one lender over the other. Some may have hidden fees or complex terms and conditions.
When do you need a solicitor for remortgaging?
If you are moving to a new lender, you will need the help of a solicitor, as mentioned you may be offered this service by a new lender but there are some circumstances where you’d have to find your own solicitor regardless.
If you are adding someone else to the mortgage when you remortgage, you’ll need a solicitor to transfer the equity. This will see the deeds altered to illustrate how the property is to be owned. The same applies if someone is coming off the mortgage. Because the ownership is changing, a solicitor needs to change the property deeds.
How much will it cost for a solicitor when I remortgage?
Costs will vary per solicitor. In some cases, you may not have to pay at all where the lender offers a fee-free legal service. Should you be required to pay for your solicitor you can expect to spend approximately £400-£500 for a solicitor when you remortgage. It will largely depend on the property value and the type of mortgage you have applied for. The fees you can expect to pay include:
- Conveyancing fee
- Land registry fee
- Copy of title
- Searches
Just be wary of the free legal services, not only can there sometimes be hidden charges but the solicitors recommended by the lender won’t always be the premium solicitors you’d expect. As a result, things may move at a slower pace than you would like.
Can legal fees for remortgaging be added to the new mortgage?
As much as this may act as an incentive for some to switch to a new lender, it simply isn’t possible. Legal fees are required upfront and as a result, cannot be added to your mortgage loan.
Can I not just save money and remortgage without a solicitor?
Unfortunately not, the legal work involved in transferring mortgages can be complex and should only be carried out by a qualified professional.
The remortgaging process for a solicitor
Upon finding the mortgage deal that suits you best, you would need to inform your solicitor. From here they will contact the current lender to request the title deeds so they can be moved to your new lender. They will also conduct property searches if the new lender requests them as well as look at the lease. Many lenders will not offer mortgages on leases with less than 80 years remaining on them.
At this time, the solicitor will also ask for your redemption statement. This shows your outstanding mortgage balance and whether there are any charges to be added.
They will then review your offer and application just to make sure everything is how it should be. This also gives them a great chance to show any aspects you may have missed. If you are happy with everything, the new mortgage can be signed.
On the day your fixed rate ends, your new mortgage should begin. The funds will move from the new lender to your solicitor who then uses that to pay off the outstanding balance on the current mortgage.
They then organise the title deeds to show the new lender and the process is complete.
Perhaps now you can see why there is a cost for their service.
Are there other fees to pay when remortgaging?
Yes. Even with a free solicitor, you’ll still be paying out for a variety of services when you remortgage. If, for example, you leave your current deal before it expires, you’ll have to pay an early repayment charge, and this can easily run into the thousands.
You may also have to pay a valuation fee although these are not particularly common. On top of these, you may have an application fee and arrangement fee to cover. Combined, these could add another £1,000 to your bill.
If remortgaging is getting confusing, speak to our team. We are a fee free mortgage broker who put your property plans first. Utilising our years of experience and extensive knowledge of the UK property market, we help you find the ideal mortgage product for your needs. From mortgages for first-time buyers to those needing the help of equity release brokers and of course, those seeking affordable remortgaging, we can help. Contact us today to find out how.
Sources
*https://www.uswitch.com/mortgages/remortgaging/remortgage-statistics/
