Re-Mortgage Guide

What is a remortgage?

A remortgage is the process of arranging a new mortgage on your property to replace your current mortgage, typically when your current promotional rate is expiring. Since you’re starting from scratch with a new mortgage, it’s an excellent opportunity to review your financial situation and ensure that the new mortgage aligns with your needs. At KG Mortgages, we assess your current circumstances and provide you with a personalised recommendation.

What is a product transfer?

Your current lender will often have a range of products to encourage you to stay with them. The main advantage is that you won’t need to submit a full application or undergo a credit check. However, there are downsides: better deals may be available elsewhere, and you might not have the flexibility to make other changes to your mortgage. Additionally, you’ll typically need to accept the lender’s property valuation, which can impact the terms they offer you.

At KG Mortgages, our free service includes reviewing your product transfer offers, comparing them to other options, and helping you arrange the transfer if you decide to stay with your current lender.

Amount to apply for.

We will need to estimate your mortgage balance on the day of completion which could be up to 6 months away. If the new mortgage isn’t enough to fully repay the old mortgage, there will be a shortfall and you will need to pay this to the solicitor Conversely, if the new mortgage exceeds the old one, the solicitor will typically refund the excess but you will still pay interest on the surplus (although sometimes this is returned to the new lender and taken off your mortgage balance). It’s often advisable to slightly overestimate the mortgage balance to avoid last-minute requests for additional funds, but this decision depends on your individual circumstances and requirements.

Arranging a remortgage.

After we have discussed your requirements and have reviewed any necessary documents, we will research your options and recommend the best one for you. We will discuss this with you to ensure you understand the key information about the mortgage you are taking.

Once you are happy to proceed, we will submit an application with the lender on your behalf. They will assess the application which will include a fully credit check (this will appear on your credit file) and a review of your documents. Additionally, their surveyor may conduct a property valuation. If everything meets their criteria, they’ll issue a mortgage offer and instruct their solicitors.

Remortgage legal process.

To finalise your remortgage, the lender will instruct their solicitor to check the property title and to arrange for the old mortgage to be repaid with the new mortgage funds.

Most lenders offer ‘free legals,’ where they select and pay for solicitors to handle basic legal work. Keep in mind that these solicitors represent the lender, not you. While there may be additional fees in some cases, lenders will always inform you. Although you can choose your own solicitors, it’s usually more convenient and cost-effective to use the lender’s solicitors. The solicitor aims to complete the remortgage on the next working day after your early repayment charge expires (or on your desired date if different), but this isn’t guaranteed and can be influenced by their workload leading up to completion.

The solicitor will send you a questionnaire to complete – these are often online but can be paper based. Where this is a joint application, they often send the questionnaire to one party only. They will also send you a mortgage deed – again these can be digital or can be paper based. If it is paper it will need to be witnessed and the original will need to be posted back to the solicitor.

Occasionally the solicitor may need to notify 3rd parties that you are remortgaging. Where this is the case there will typically be an additional charge. The solicitor will notify you of this. If there is a fraud prevention restriction on your title, you may need to make arrangements to visit another solicitor in person with your ID – there will be additional charges for this (fraud prevention restrictions are only ever put there at your request).

Once they have everything back, its likely things will go quiet until about a week before completion is due. If your current mortgage has a fixed rate or other product which includes an early repayment charge, you do not want to complete until the day after your current deal has expired as these charges tend to be thousands of pounds. 

The solicitor will need to request a redemption statement from your old lender telling them exactly how much they need to pay repay the mortgage. Because of the way daily interest is calculated, your mortgage balance changes daily so these statements tend to only be valid for a few days. The solicitor may get one early to given them an idea of the final balance, but they will usually need to order a new one a few days before you complete. Where the redemption statement is issued before you make a payment (e.g. you complete on the first day of the month but there is also a payment due that day), the redemption amount will not include this payment. You must still make the payment on time otherwise you will be in default. This extra payment will then be refunded to you by your old lender.

First and last payments.

One important thing to note is the first & last. The first payment is usually higher than your normal payments. The actual payment will depend on your completion date as no payment will be due until the month following completion. The amount due in that month will consist of a full monthly payment plus the interest for the month of completion. The lender will write to you once you have completed to confirm this. If you complete after, or around the same time as your normal mortgage payment is due, its likely this will still be taken by the old lender. Once completion has taken place, the old lender will arrange a refund, either directly or included in any money returned to you via the solicitor. It is important that you do not cancel your direct debit as this could be classed as a missed mortgage payment or hold up your refund. Your new mortgage payment will normally be due the month after completion which should mean you have had any refund by that time.

Your home may be repossessed if you do not keep up repayments on your mortgage