I’m remortgaging for the first time and am set to switch from my current mortgage with Halifax to NatWest in September.
However, it’s proving more taxing than I thought. I applied for the mortgage and had the offer, but am now faced with a huge amount of admin which I didn’t expect. I’ve just had a baby and this is hard to manage.
The lawyers that have been assigned my case have been sending email after email relating to various documents and costs.
They say I need to pay £90 to deal with a Land Registry anti-fraud restriction on the title deeds.
They want me to sign and witness a mortgage deed and to also send proof of ID and address that have been certified by a solicitor.
Mortgage help: Our weekly Navigate the Mortgage Maze column sees broker David Hollingworth answering your questions
On top of that they need me to sign and return their terms of business and fill in a 20 page questionnaire which requires me repeating most of the stuff I have already filled in for my application. They have also sent emails requesting a copy of the lease.
Would it make sense to just stick with Halifax and move to a new product with them to avoid this mountain of paperwork?
Someone told me lenders sometimes offer preferential rates to their existing customers. Is that true?
David Hollingworth replies: A mortgage is likely to be the single biggest cost that you face each month, so it makes sense to keep it as low as possible.
Failing to be proactive could easily result in you spending thousands of pounds more than necessary each year.
Most deals will revert onto a higher variable rate at the end of any incentive period, such when a two or five-year fixed rate ends.
This rate could easily be two or three per cent higher than the rates on offer elsewhere.
Shopping around for a better deal is important and with thousands of different products you should include all options, whether from another lender or your existing lender.
I’ll explain what the process involves, whether you switch to another bank or building society or stay put.
Remortgaging to another lender: What it involves
The process of remortgaging to a new lender is in essence a simple one, but if you’re not prepared for what’s coming your way it can feel like a lot to take on board.
As well as applying for the mortgage itself, there will also be a valuation of the property by the lender and some legal work to put the new mortgage into effect.
In theory the valuation and legal work could add more cost, although many lenders will often provide incentives to counter those costs, providing a free basic valuation and help with the basic remortgage legal work.
That could either be through the lender’s nominated solicitor, or through a cashback on completion designed to cover all or most of the cost of using your own solicitor.
While basic legal work is covered, there can be other costs depending on the circumstances.
Leasehold title is certainly something that can add cost, as the freeholder may charge a fee for providing any necessary responses to the solicitor’s enquiries.
Compare: Hollingworth says a mortgage broker will be able to access the Halifax product transfer rates and give a clear comparison to the NatWest deal and others on the market
The solicitor will ask you for a copy of the lease in an effort to speed things up and potentially limit charges from the freeholder.
The anti-fraud restriction you have been asked to pay for is something that you will have opted into. It means a solicitor has to sign off any attempted change to your property’s information on the Land Registry.
However, it does also mean that there’s a need for enhanced verification of ID, leading to the need for solicitor certification and added administration costs.
Finally, there will be a need for some form filling and there could be a feeling of déjà vu. There’s plenty of moving parts in what is a relatively straightforward switch and that can lead to duplication of requests.
What about a product transfer?
It’s always worth considering what your existing lender will offer when shopping around, and lenders have got a lot better in offering customers new deals to switch to.
It’s understandable that, with the arrival of your new baby, this admin may all feel too much when you have so much on your plate.
Staying with the existing lender and switching on a like-for-like basis with no change to amount or term won’t require a new affordability check or proof of income.
There’s also no legal work, as you’re not taking a new mortgage with a different lender and are simply switching rate.
That will reduce the paperwork but also the choice, so you need to consider the rate compared to the NatWest deal and others in the market.
Some lenders can offer existing customers rates on par or even a little better than for new customers, but that doesn’t mean they are the best on the market.
You will need to specifically check what Halifax will offer, as it’s a lender that offers rates set depending on the individual customer.
Advice will help
Using an adviser will offer benefits whichever path you go down and help cut through some of the jargon.
They will also be able to consider other elements, such as reducing the term or overpaying to cut your total interest bill.
That may not be high on your priority list now but could be relevant in coming years.
Importantly, they will be able to access the Halifax product transfer rates and give a clear comparison to the NatWest deal and others on the market.
This will give you clarity of the cost, which will help you decide whether the remortgage option will offer bigger savings and potentially make the form-filling worthwhile.
