Why Remortgaging might be the answer as interest rates rise

Posted on August 26, 2022

Our team of residential property solicitors are getting a number of enquiries about remortgaging at the moment in light of higher interest rates and the cost of living crisis. Our homes are often our biggest financial asset and making changes to a mortgage can in some cases save £100s.

Residential Property Solicitor Michelle Ong offers some advice on remortgaging and how Pearson Solicitor can help.

What is Remortgaging?

It is essentially when you take out a new mortgage on a property you already own. This can be for a variety of reasons and as seen recently in some cases it’s a cost of living crisis reaction and a chance to protect against steep rate rises in the future, to get better rates or simply to raise money on your property. It can take over 8 weeks to sort out the whole process so if time is of the essence it pays to start the process as soon as possible.

Remortgaging will either replace your existing mortgage, or allow you to borrow money against your property and around a third of all home loans made in the UK are actually remortgages.

How does Remortgaging Work?

Check out the deals available, can you switch with your current provider? Then consider the costs? You need to calculate your new mortgage repayments and remember to consider completion fees, conveyancing costs and disbursements, property valuation costs, early repayment charges (ERC) or exit fees charged by your current lender.

An agreement in principle is part of the credit check process and will give you an idea of how much you can then apply for and you will need confirmation of income, paperwork for your current mortgage and home insurance details.

Your property will be valued as security for the new mortgage and if the value of your house has increased substantially you may find you're now in a lower loan-to-value band, and therefore eligible for much lower rates. Finally, the completion date is when your new mortgage starts and your old mortgage is repaid.

Do you need a solicitor to remortgage?

It does involve some legal work and your solicitor will manage all the necessary paperwork, transfer funds securely for you and send you the legal documents to read and accept.

“It has been a strange couple of years in the property market, with lockdown stopping things completely, then the changes to stamp duty and rushes to complete, followed by a surge in the general sale and purchase marketplace,” said residential property solicitor Michelle Ong.

“We are now noticing existing clients who we helped move in previous years coming back to us for remortgage advice. Working closely with a great team of experienced mortgage brokers will help clients obtain the best possible rate available in the current climate”

“Recently mortgage borrowing rules have been eased and affordability tests scrapped and we have to trust that borrowers know their own affordability and borrow accordingly. Personally, we would prefer to see a wider market offering of 5% mortgages allowing first time buyers to get onto the ladder particularly as we are seeing the continuance of the sellers’ market. Getting a deposit is the biggest challenge young buyers or first time buyers are facing these says,” added Michelle.

How can we help

If you have got a house to sell or have seen a house you want to buy and need a residential property solicitor call us for a comprehensive quote on 0161 785 3500. All prices quoted are fully transparent with no hidden costs. We can also give advice on all aspects of remortgaging your property. You can also email us at enquiries@pearsonlegal.co.uk

Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers Ltd or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.

This blog was posted some time ago and its contents may now be out of date. For the latest legal position relating to these issues, get in touch with the author - or make an enquiry now.