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What is involved with a Remortgage?

If you are looking to release equity from your home through a remortgage then your mortgage company will likely insist that you hire a conveyancing solicitor to handle the paperwork. Depending on the size of the loan that you are seeking the mortgage company will require that they have a charge over the property. This is so that they can have a legal precedent to repossess the property in the event that you fail to meet the loan payments. So the mortgage company will require that you get a conveyancing solicitor to do the work at your expense.

There are many reasons why a person might remortgage their house but below are listed some of the most common:

  • if they are investing in a second home as a rental property
  • if they are buying a home as a holiday or retirement project
  • to raise capital to inject into their business
  • for home improvements to increase the value of their house
  • to buy a car or the holiday of a lifetime

Whatever the reason for the loan a property offers a flexible investment which is fairly easy to raise capital against. This is because the value of a property is practically guaranteed to rise over the course of a long term investment and so the mortgage company will be happy to lend money in the form of a remortgage based on this certainty. Of course if the housing market drops in the short term you could potentially find yourself in a position of negative equity, where you owe more on the property than it is worth. This is not a problem while you can afford to make payments but otherwise may lead to repossession.

It is very common for people to have more than one mortgage registered on their house. One problem that can arise from this is when you come to sell the house. It is more time consuming for your conveyancer to remove more than one charge from the property so they will probably raise an extra fee for each extra mortgage that they have to redeem on your behalf. Even if you finish paying your mortgage the charge may remain until a conveyancing solicitor is paid to get it removed. Just because they still have a charge on the property doesn’t mean that the bank would be able to repossess your house though if they had less equity invested in the house than you.

You might wonder why the bank can’t just increase the mortgage account that you already hold with them. This is probably because it would be more work for them to shut the old account down and create a new account with a bigger limit. When you entered into the original contract the term was set and the interest payments calculated. The new loan would likely involve a new product with a new contract and a different set of terms and conditions. It is easier for them to add the new loan as a new product. This also means you could potentially get different remortgages from different lenders.

NBM conveyancing solicitors are on the panels of all the major mortgage companies so we know we can act for you in your transaction. If you plan to go to another solicitor you should first check that they can represent you and your mortgage company.

So if you have read this article and considered the information within it and you think arranging a remortgage might be the right way for you to release some equity from your home why not try the instant quote system and check the price of NBM Solicitors remortgage service?

Posted by on 12/01/2015 in Mortgages

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