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Complete Guide for Remortgage Conveyancing

By Mahinan Pathmanathan

How do you carry out conveyancing work for remortgage transactions with a bank or building society? This article is a complete guide for remortgage conveyancing when the mortgage lender is not a private individual. Lenders usually do not allow borrowers to carry out their own conveyancing when they are remortgaging property, even if the borrower is a conveyancer. However, this guide will provide remortgage clients and conveyancers an insight into what goes on during the remortgage conveyancing.

This guide is intended as a reference for how your conveyancer performs remortgage conveyancing in a strict and proper manner. It is worth noting that most firms are not this stringent when it comes to performing checks. Please read this guide completely to get a complete understanding of conveyancing work on remortgage.

Step 1: Request for title deeds and redemption statement from the current mortgage lender

The first step when you remortgage property is to communicate to the current mortgage lender that you are remortgaging the house or property. A written request is made by your conveyancer to the mortgage lender to forward the title deed of the property and also the redemption statement.

At this stage, it must be conveyed to the mortgage lender that the redemption statement is being requested only for budgeting purposes and is not final. The redemption statement is what will allow the conveyancer to determine whether the new mortgage advance will be sufficient to cover the remortgage.

Well, it has to be enough, but more often than not, remortgage clients miscalculate the costs and the amount that they owe; therefore a redemption statement will help clarify things. Provide the lender with a mortgage account number which the client will produce along with the initial written instructions to remortgage house or property.

The mortgage lender typically charges a fee for producing the redemption statement. There will also be a deeds production fee. Remortgage conveyancing solicitors must inform their clients of this fee. Clients must also be informed about the conveyancing solicitor’s intent to request the redemption statement and the title deeds. Your conveyancer will usually notify you about this via the initial terms and conditions.

Step 2: Obtain official copies of the title

The next step is to obtain official copies of the title deeds for the property that is being remortgaged. The authority to contact is the Land Registry.

The conveyancer will order the documents from the Land Registry through their portal using his account that he has set up with them. If your conveyancer does not have an online account, he may also request the documents through post.

The form that your conveyancer will need to print is the OC1, which is available at the Land Registry Forms and Publications page. The Land Registry Office Finder will help find which office the completed form must be sent to.

Bear in mind that the boxes 1, 2 and 3 in the form need not be filled. In box 4, the conveyancer will also fill in the fee paid. It is £6, but you may want to check the updated Land Registry Fees Ready Reference Guide to confirm the amount. Box no. 5 is for the address and box no. 7 is to indicate whether the remortgage home is on freehold or leasehold property. To obtain an official copy backdated prior to the receipt of the application, your conveyancer will tick the relevant option in box no. 8.

Step 3: Checking the title

In remortgage conveyancing, the general view seems to be that it is not imperative to perform in-depth title checks like how a conveyancer would if acting for a purchaser. The logic behind this thought is that the remortgage conveyancing solicitor is required only to check whether the property is a good enough security for the loan. However, as a matter of ethics, to earn the remortgage conveyancers fees, at least a few conveyancers may perform a thorough check and not cut too many corners.

Remortgage conveyancing checks have now become very basic. But remember that if a lender has to repossess, the property will be sold to an individual who will have his own conveyancer who in turn will perform a thorough title deed check. The basic expectation here will be to have all defects to be corrected.

There are a few matters where a lender may not be really concerned about. Factors such as noisy neighbours, or modifications to the area that does not directly impact the value of the property may not be of much concern and may not need in-depth checks, however, it is advisable to err on the side of caution than otherwise.

Step 4: Checking official copies of the remortgage property

If the land is registered, the official copies of the property will give you all the details about the legal title of the property. An official copy from the Land Registry is therefore the same as a full set of title deeds to the property. The official copy will have the official copy banner, HM Land Registry title number, official copy edition date, property register, proprietorship register, proprietor details, indemnity covenant, restrictions, charges register, notices and all other details that the conveyancer will need to know for remortgage conveyancing.

Step 5: For leasehold properties

If the remortgage property is leasehold, the conveyancer will need to check the lease and also raise some enquiries with the landlord or the managing agent. These enquiries are to be made to check whether all service charges and rents paid are up to date, who must be contacted for the notice of charge etc. Your conveyancer will check for the lease when he receives the title deeds because it must be with the documents. If it is not included in the deeds, he will request for an official copy from the land registry.

Step 6: Conducting searches

Most lenders may not demand that searches be carried out for remortgage. However, your conveyancer must check the CML Handbook Part 2 to find the particulars of your lender. If the lender does not require searches, get a No Search Indemnity Insurance. Indemnity insurance is obtained to protect a buyer and lender from defects in the title that cannot be resolved. Indemnity insurance must be used only as a last resort, but in practice it is often found that indemnity insurance is used as a quick fix to correct a defect.

If on the other hand the lender demands a search, the conveyancer must perform one. Searches are a set of standard enquiries that the buyer’s conveyancer raises about the remortgage home, with the local council, water authority etc. It must be remembered that conveyancing searches are not surveys and will not give you any information on the physical condition of the property in question.

Conveyancing searches give crucial information about the property, such as whether there is anything in the area that will affect the property (for example, presence of mine shafts in the area), whether the road to the property is a publicly adopted highway etc.

Step 7: Studying the mortgage offer

Two copies of the mortgage are usually issued by the lender, one each for the borrower and the conveyancer. The conveyancer’s mortgage offer copy will be different from the one that is issued to the borrower. The conveyancer’s copy will have the lender’s instructions that entitle the conveyancer to act on their behalf in the remortgage. The mortgage offer also includes the mortgage deeds and all other legal documents. The mortgage offer will specify how much the purchaser wants to borrow and how much the conveyancer will actually receive.

Checking of the mortgage offer has now been made simple with the help of a standard format that all lenders are expected to follow. The important details to be checked include the address of the property, the name of the borrowers, the purchase price, term of lease, ground rent, service charge, special conditions, amount to be advanced, the certificate of title, mortgage deed, unsecured loan agreements, occupier consent and waiver forms, deeds of guarantee etc.

Step 8: Preparing for the completion of remortgage conveyancing

After the official copy has been checked, leases and searches have been performed as required, all defects and problems have been reported to the mortgage lender, and they have given the go ahead, it is time to arrange for the completion of the remortgaging as per the instruction of the borrower. To complete your conveyancer will need to perform the next three steps.

Step 8a: Requesting a final redemption statement

Once the remortgage is complete, the borrower’s existing mortgage must obviously be repaid. Remember that the first step was to obtain a provisional redemption statement. Though your conveyancer may still have that copy, he must still obtain a final redemption statement that is calculated to the date of completion. He will check whether all costs have been added by the lenders to the provisional figure and whether any payments have been missed by the borrowers.

The redemption statement will indicate the amount owing to repay the mortgage and other financial charges. The statement is needed because the seller’s conveyancing solicitor is obliged to provide an undertaking to the buyer’s conveyancing solicitor that all the charges that are registered against the property will be repaid. For this to be done, the lender must supply written evidence on how much money is needed to repay the debt, in the form of a redemption statement.

Step 8b: Carrying out final searches

A bankruptcy search and a priority search (OS1) must be carried out against each borrower before completion, and before requesting the mortgage advance.

A bankrupt’s assets vest in the trustee in bankruptcy, and therefore, the bankrupt is not eligible or entitled to borrow money or to charge the property. Also, it goes without saying that no lender will want to lend money to a bankrupt individual.

The priority search is required to determine whether any other interests have been registered against the title after the official copy is obtained. It will freeze the register and allow your application to register the charge first and to be completed without having another interest registered after the date of your search. There is a 6 week priority period within which your application must be lodged.

Step 8c: Requesting mortgage advance

You can request the new mortgage advance from the new lender after you receive the pre-completion searches and after you have ordered the final redemption statement. The mortgage lender will typically need up to 2 weeks notice for them to release the mortgage funds, so your conveyancer will request for funds as early as possible.

Request for funds is made by submitting to the lender the Certificate of Title. This is a document that is found in the mortgage offer. It is through the Certificate of Title that the conveyancer expression his satisfaction about the title to the lender.

The certificate of title requires the date of completion which is the date on which the funds will be transferred to the conveyancer. Usually, the transfer of funds is accomplished by CHAPS and it means that the lender cannot guarantee the time that the funds will arrive, they can only give a confirmation that the funds will arrive before close of business.

After submitting the certificate of title, your conveyancer will check with the new mortgage lender to see if they have received it and also that there are no outstanding conditions that will prevent or delay the transfer of funds.

Step 9: Remortgage completion

Now your conveyancer will have received the final redemptions statement, cleared the pre-completion searches and the mortgage advance. Next he moves to the completion of remortgage. To complete, your conveyancer must supply a completion statement to the borrower. The statement will include details on redemption figure for the old mortgage, remortgage advance and all costs and disbursements.

The conveyancer must redeem the existing mortgage on the day that the remortgage is completed. This is usually done by telegraphic transfer except in instances where the lender specifically requests that it be done in some other manner. Since the interest accrues on a daily basis, it is important to ensure that the funds arrive with the lender only on the day of completion and not before, because you do not want to pay the extra interest charges. The conveyancer must also send the lender a DS1 unless they use the EDS1. In either case, it is important that your conveyancer writes to confirm that he has redeemed the existing mortgage.

Step 10: Registering the new mortgage

After the remortgage completion, your conveyancer will need to register the new mortgage. He may not need to submit an SDLT1 if the transaction was remortgage only and did not involve any transfer of equity. Unless the AP1 is submitted electronically, it must also include the DS1 that is executed by the earlier lender. It must also include the new mortgage deed as well as any other certificates that deal with any restrictions whatsoever on the title.

It is through the process of registration that your conveyancer notifies the HM Land Registry of the land transaction and by which the registers of the titles are updated to reflect the changes that were brought about by the transaction.

Registration is compulsory for all property transactions in England and Wales. For all matters affecting the land, it is the registers of the title with the Land Registry that will serve as definitive proof. Interest affecting the title to a piece of land that is not registered will get no protection under the law.

The fee for registration starts from £40 and may vary depending on the purchase price or the value of the transaction.

Step 11: Transfer of equity (if applicable)

When one or more people are added or removed from the title as part of the transaction, it is known as transfer of equity. It is a change in the legal ownership of the property. It usually takes place when a borrower is added to or released from a mortgage.

The mortgage lender must give consent if a party is to be released from the mortgage. The lender may not wish to give consent for release if he suspects that the new owners may not be able to afford contractual payments. In such cases, the previous joint owner who applied to be released from the mortgage still remains liable to make the mortgage payments even after the transfer is done.