Do I Need A Solicitor When Re-mortgaging?

Thinking of re-mortgaging? Conveyancing Expert bring you all the latest news on re-mortgaging.

29 April 2021

During the early stages of the pandemic, the number of mortgage products available fell sharply to around 50 percent of their previous level. While lenders have started reintroducing products, numbers have not quite returned to ‘normal’ levels yet, so your choice may be limited. Conveyancing Expert bring you all the latest news on re-mortgaging in 2021.

Re-mortgaging - All You Need To Know 

Mortgages are generally people's biggest financial commitment, taking up a large portion of their monthly outgoings. Lenders are more cautious while economic uncertainty continues. Mortgage companies, like other employers, face challenges in maintaining their normal services. As a result, timescales for processing and finalising applications have lengthened and this can mean a delay in receiving funds.

Should I Re-mortgage?

Making sure you have the best deal is important as it can save you hundreds each month. If you already have a mortgage and are looking to change lender, we can help you through the re-mortgage conveyancing process.

There are signs of a strong recovery for the re-mortgaging sector in 2021, as rising house prices boost homeowners’ equity allowing them to benefit from better loan-to-value products.

Why Might I Re-mortgage?

There are several reasons to think about re-mortgaging but the main reason is going to be saving money...Maybe your current deal is about to end. Many introductory mortgage offers only last a short time, often two to five years. This is the typical length of time offered on a fixed rate, tracker or discount mortgage. The most common time to re-mortgage is when this fixed or introductory tracker or discounted rate on your mortgage ends. 

  • Mortgage Term Ended: Once your introductory mortgage offer has ended, you will be on the lender’s Standard Variable Rate (SVR). It is unlikely this will be the cheapest option, so re-mortgaging is going to be something you will have to think about. Your lender may be happy to retain your custom so this should always be your first port of call.
  • Better Rates: If you are tied into an initial deal you might have to pay an early repayment charge of up to  2-5% of your outstanding loan. Regardless of exit fees, the savings can be huge
  • Change Of Personal Circumstances: If your current mortgage is no longer the most appropriate, a different type with different terms might suit you better.
  • Flexibility: The predictability of a fixed-rate re-mortgage might be more important than low repayments. Or maybe you’re earning more than when you took your mortgage out . Flexible features usually come with a slightly higher interest rate. 
  • Raising Extra Money: Affordability will be reassessed by your lender to make sure you’re not over-stretching your finances.

Early Repayment Charges

Most mortgages have an early repayment charge during the initial special discount period. Early repayment charges are often a percentage of the amount you owe. Some lenders charge a flat rate like 4% whilst others charge a higher percentage the longer you have left on your mortgage.

Check the costs on your mortgage statement, in your terms and conditions or by asking your lender for a redemption statement. This will confirm how much you owe and what fees you need to pay to clear the balance. Conveyancing Expert will help you understand all charges that come with re-mortgaging your property.

Do I Need A Solicitor When Re-mortgaging?

It is especially important to employ a conveyancing expert when: 

  • Adding Someone To A Mortgage: you will need a solicitor as ownership of the property is changing. This is known as a ‘transfer of equity’. Deeds will have to be amended and paperwork drawn up specifying how you will own the property.
  • Removing Someone From The Mortgage – as above, this means that the ownership of the property is changing so a solicitor will be needed to amend the deeds.

Our expert conveyancing team can answer all your re-mortgaging queries. Contact us today for a quote.

Mortgage Rates And Availability In 2021

Mortgage Availability has been improving for several months now, providing a boost to both home buyers and re-mortgagers alike. There are currently more deals on the market than there has been since last March. In fact, the number of mortgages on offer has risen by 42%, with offers of low-deposit 90% deals being a driving factor. 

As for mortgage rates, the increased availability hasn’t made them cheaper. Rates are still rising slightly, with two-year deals continuously on the increase. Saying that however, the speed of the increase is slowing down. Lower rates could be on the horizon.

How Much Can I Borrow?

Lenders used to multiply your income to work out how much you could borrow. It’s all about affordability. Lenders look at a detailed assessment of your income compared to your outgoing and work out how much spare cash you have each month. They take everything into account.

They will require you to have a ‘cushion’ in case mortgage rates rise, and leave you unable to pay. 

Re-mortgaging If You’re Self-Employed

It’s becoming harder to get a re-mortgage if you’re self-employed. For example:

  • Self-employed applicants will only be able to borrow up to 60% of a property’s value from Santander.
  • Halifax: self-employed borrowing is limited to 4.49 times annual income. 
  • HSBC: not currently lending to self-employed applicants whose income has been impacted by the recent tightening of COVID-19 rules. Applications will reopen after the lockdown ends. 
  • Nationwide: self-employed applicants can borrow up to 85% LTV. 
  • Natwest: if a self-employed applicant has had a Self-employed Income Support Scheme grant, the proceeds will not be considered as income. 
  • TSB: self-employed applicants can borrow up to 75% LTV. Borrowing is limited to 4.25 times annual income.

You will need at least two years of accounts to prove your income.

This can be done in one of two ways.

  • Business Accounts. Preferably three year’s worth of accounts — though two can sometimes do. They usually need to be signed off by an accountant.
  • Tax Returns. If you can’t show business accounts, two or three years tax returns are the next best option. You’ll be assessed on profits, not turnover. 

Those who have recently become self-employed will simply not be able to re-mortgage.

Whatever your circumstances, it is always a good idea to keep up with all the latest mortgage information, with Conveyancing Expert, especially if you plan to apply for a mortgage in the near future.

To discuss any of the above or if you have any specific queries, please do not hesitate to contact us on 0161 794 7799.
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