Remortgage Conveyancing

This section is a guide to carrying out the conveyancing work in respect of a remortgage transaction where the mortgage lender is a bank or building society (i.e. not a private individual). Although this guide is primarily aimed at conveyancers since a lender will not allow a borrower to carry out his own conveyancing and so DIY conveyancing will not be possible, it will hopefully give remortgage clients an insight into the process also.

It is recommended that anyone intending to use this guide to assist in carrying out the conveyancing work on a remortgage reads it fully before commencing conveyancing work. You should note that this is a guide on how to do this work "properly". Some firms do take a commercial view in respect of remortgages and will carry out much less stringent checks.

Requesting the Title Deeds and a Redemption Statement

The first thing you need to do is to write to the current mortgage lender and request that they forward to you both the title deed and a redemption statement. You should indicate that the redemption statement is for budgeting purposes only and is not final. Obtaining a statement at this stage will allow you to check that the new mortgage advance is going to be enough to actual complete the remortgage. Of course it should be enough, but inevitably clients will occasionally misjudge what they owe or what the costs are likely to be.

Lenders will often add a fee for producing a redemption statement and a deeds production fee to the mortgage balance and you should warn your client of this possibility and that you intend to request the deeds and a redemption statement, perhaps in your initial terms and conditions. 

When writing to the lender you'll need to supply a mortgage account number, which you should ask your client to provide when you seek ihis initial written instructions.

Obtaining Official Copies of the Client's Title

The next stage in the remortgage conveyancing process is to obtain copies of the registers of title for the property ("Official Copies") which your client wishes to remortgage from the Land Registry. If you do not have an account set up with them then you will need to go to the land registry forms and publications area and complete and print the form OC1. To find out which land registry office to send the form to, visit the land registry office finder page. When completing form OC1 you do not need to fill in boxes 1 and 2, nor do you need to put the OS map reference in box 3. At the time of writing the fee to be placed in box 4 is £6.00. Up to date information can be found in the land registry fees ready reference guide. You must complete your address details in box 5 (key number can be left blank). In 7 tick the box for the freehold estate or leasehold estate (depending on whether your client's property is freehold or leasehold), in 8 tick the first box indicating that you require a back dated Official Copy and in 9 tick the first 2 boxes to request a copy of the register and plan.

Checking the Title

When acting in a remortgage some take the view that it is not necessary to perform as in depth a title check as you would if acting for a purchaser since you are only required to check that the property is a good security for the mortgage loan. My own view is that remortgage conveyancing checks have become much too basic and the fact that if a lender has to repossess, it will be selling to an individual whose conveyancer will perform a thorough check and will expect any defects to be corrected, and not to another lender.

It is true that there are certain matters that a lender is unlikely to be interested in such as changes to the area that don't affect the value of the property or noisy neighbours, and they will often not require searches, but corner cutting should be kept to a minimum.

Checking the Official Copies

For registered land the official copies should give full details of the legal title to the property. Go to the page Official Copies for a guide on how to interpret them. This guide is drafted as though you were acting for a buyer but it still broadly makes sense from a remortgage point of view. 

Leasehold Properties

If the property is leasehold, you'll need to check the lease and you'll need to raise certain enquiries with the landlord/managing agent to check such things as whether the service charges and rent are paid up to date, who you need to serve notice of charge on etc.

The following page the registered sale conveyancing guide, contains comprehensive guides to checking a lease and raising and interpreting  landlord enquiries. The lease should be with the title deeds, if it is not, an official copy will need to be requested from the land registry.

Searches

Most lenders will not require searches to be carried out for a remortgage, though you will need to check part 2 of the CML Handbook for the particular lender. Where searches are not required, it will be necessary to obtain "no search indemnity insurance". For more information on indemnity insurance have a look at legal indemnity insurance.

If searches are required have a look at conveyancing searches to see how they are requested and interpreted.

Checking the Mortgage Offer

The lender will issue at least 2 copies of the mortgage, one to the borrower and another to the conveyancer. The conveyancer's copy should incorporate the lender's instructions to the conveyancer to act on its behalf in the remortgage. It should also include the mortgage deeds and any other necessary legal documents.

The mortgage offer will state how much the purchaser is borrowing, and how much the conveyancer will actually receive (though this is not always completely clear and care should be taken).For a full tutorial on the subject of mortgage offers, visit the Mortgage Offers page.

Preparing for Completion

Once the official copies and if applicable lease and searches have been checked and any problems or defects have been reported to the mortgage lender and they have confirmed they are happy to proceed, you are ready to arrange completion (subject of course to the borrower's instructions). In order to complete you will need to do three things:

• Request a final redemption statement
• Carry out final searches
• Request the mortgage advance

Requesting a Final Redemption Statement

On completion you'll obviously need to repay the borrower's existing mortgage. Although you should already have a provisional redemption you should still obtain a final one calculated to the completion date, even if the one you have appears still to be in date.

Some lenders will not add all of the costs to a provisional figure and also, the borrower may have made (or missed) a payment in the meantime. For more on obtaining and interpreting redemption statements see mortgage redemption statements.

Carrying Out Final Searches

Prior to completion, and prior to requesting the mortgage advance, you  will need to carry out a bankruptcy search against each borrower and also a priority search (OS1). The bankruptcy search is necessary because a bankrupt's assets actually vest in the trustee in bankruptcy so he is not entitled to borrow money or to charge the property (or his share of the equity if he is a joint owner), as well as the fact that obviously the lender would not want to lend to someone in that financial situation.

The priority search will tell you whether any interests have been registered against the title since you obtained official copies at the outset, and will "freeze" the register to allow your application to register the charge to be completed without the risk of another interest being registered after the date of your search (provided your application is lodged in the 6 week priority period). For more on pre-completion searches, including how to order, see pre-completion searches.

Requesting the Mortgage Advance

When you've received clear pre-completion searches and you have received, or a least ordered, a final redemption statement, you are in a position to request the mortgage advance from the new mortgage lender. Depending on the lender they may need anything from a day to two weeks notice to release the mortgage funds. 

Funds are requested by submitting the Certificate of Title to the lender. This document is found in the mortgage offer and is the document which confirms to the lender that the conveyancer is satisfied with the legal title. See the topic Mortgage Offer for more.

The certificate of title will ask for the date of completion, which is the date that the funds will be transferred to the conveyancer. The lender will usually transfer the funds by CHAPS which means that they can only guarantee that the funds will arrive before close of business, they cannot guarantee a time.

It is a good idea to contact the mortgage lender a day or two after submitting the certificate of title to check that they have received it and that there are no outstanding conditions.

Completion of the Remortgage

Once you are in receipt of a final redemption statement, clear pre-completion searches and the mortgage advance you are in a position to complete. You'll obviously need to supply a completion statement to the borrower detailing the remortgage advance, the redemption figure for the old mortgage and your costs and disbursements. Feel free to use the following template - template remortgage completion statement.

On the day of completion you'll also need to redeem the existing mortgage. This should be done telegraphic transfer unless the the lender specifically requests otherwise. It is important that the funds arrive with the lender on the day of completion as interest will usually accrue on a daily basis. Unless the lender uses the EDS1, you'll need to send the lender a DS1. Either way you should write to confirm redemption.

Registration

After completion the new mortgage will need to be registered. Provided the transaction was remortgage only, with no transfer of equity, there is no need to submit an SDLT1. Your AP1 should include the DS1 executed by the outgoing lender (if not submitted electronically), the new mortgage deed and any certificates to deal with any restrictions on the title. For details on how to make the application see the registration page

Transfers of Equity

If, as part of the transaction, one or more people are being added to or removed from the title, this is known as a transfer of equity. For guidance on dealing with this type of transaction read transfers of equity along with this guide. We also have an indepth 49 page transfer of equity kit to help with the process.