‘I want to remortgage when my fixed-deal ends, do I need a solicitor?’

You asked

“I’m currently on a two-year fixed rate mortgage deal that’s due to end on 31 July. My current lender is offering a rate of 5.1% if I fix with them for another two years, however my broker has found a cheaper rate with a different bank. I want to switch, but have now been told I will need a solicitor which is likely to cost me around £500. Is this absolutely necessary?”

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Our response

It is estimated that about 116,000 fixed-rate mortgage deals are due to expire before the end of June – exactly two years since the government brought an end to the stamp duty holiday.

Many of these homeowners now face huge increases to their mortgage bills as interest rates have rocketed since the disastrous mini-Budget in September. 

If you do nothing once your deal comes to an end you will be rolled onto your lender’s standard variable rate (SVR), which can be as high as 7.49%.

To avoid this, you could  take out a new home loan with a different lender – this is called remortgaging. Or you could opt for a product transfer where you get a new deal from your existing lender.

Remortgaging may be cheaper in the long run because you will have access to the whole of the market, not just your own lender’s mortgage deals, and therefore a better chance of securing a lower interest rate, among other potential benefits.

However, unlike product transfers, remortgaging deals typically require conveyancing – legal work to complete the transaction  – and solicitors’ fees for this can sometimes be as high as £500.

Looking for a mortgage? Try this free comparison tool to find a deal.

I’m not borrowing more or moving, why do I need a solicitor?

If you’re remortgaging, you will need a solicitor in place to manage the transfer. This is because the title deeds will have to be migrated from one lender to another. 

Many banks and building societies have deals in place where they cover the legal fees of remortgage customers coming to them through their own solicitor, or they offer cashback to offset these costs. 

So always speak to your prospective new lender or your mortgage broker to find out what options are available.

Read more: Best mortgage brokers

Can I cut the solicitor out and do it myself?

In short, no. While remortgaging is not as complex as buying a house, which requires local searches and land checks, there are still legal processes that must be followed when transferring a loan to another lender. This is because you are essentially paying off your current mortgage with a new one.

Once you have found a deal and instructed your solicitor, they will contact your current lender to request the title deeds in order to begin the process of transferring them over to the new lender.

Your solicitor will also ask your current lender for a redemption statement. This shows exactly how much you will need to pay to clear your mortgage. It will also show if you are liable for any early-repayment charges or exit fees to your existing lender before you can remortgage.

They will then review the terms of your new mortgage offer and highlight any key points or small print that you may have missed. This is particularly useful if you found the deal yourself and do not have a broker to hand.

Once you and your remortgage solicitor are happy with everything, you can sign the new mortgage deal.

On the day of the transfer – ideally the day that your current fixed-rate deal ends – the solicitor will receive the funds from your new lender. Your solicitor will then make sure that the new loan has paid off your current mortgage in time for the transfer.

As a final step, the solicitor will register your title deeds with the Land Registry to reflect the change of lender.

Read more: Is now a good time to remortgage?

How much is a solicitor likely to cost?

Most solicitors’ firms charge £250 to £500 for remortgaging, but many lenders tend to cover these costs through cashback or by offering the legal work as a free service if you use their own recommended conveyancer. The drawback, though, is that they typically won’t use a high-charging solicitor, so progress may be significantly slower. 

You may face paying more if you are a Help to Buy or a shared-ownership homeowner as the solicitor will also need to draft up documents for the additional parties involved.

If you are searching for a solicitor, do your research: you need one that specialises in conveyancing and is reputable. 

Check Trustpilot reviews on speed and efficiency and ask friends and family for recommendations.  Most remortgage transactions will be done remotely and digitally, but if you prefer sensitive documents to be delivered in person, you may want a solicitor that is local to you.

It’s also important to compare the costs and services, so make sure you get quotes from at least a couple of different firms. 

Read more: Will mortgage rates go down in 2023?

Are there any other fees I need to be aware of when remortgaging?

There are other fees and charges to be aware of when remortgaging too:

• Early repayment charge. You may have to pay a charge if you remortgage while still under the terms of your current deal.
  This is likely to be a fixed percentage of the outstanding mortgage balance for the duration of the mortgage deal (e.g. 5%) or a reducing percentage in line with the term of the mortgage deal (e.g 2% in year one and 1% in year two for a two year mortgage deal).
  On an average mortgage of £250,000 this could be as much as £12,500 (based on a fixed 5% fee).
• Deeds release fee. This pays for your current lender to send your solicitor the title deeds. The charge doesn’t always apply. In cases where it does, online mortgage broker Habito says you can expect to pay up to £225. The charge forms part of your final redemption figure.
• Valuation fee. Most lenders offer free valuations for remortgages, particularly for properties under £1 million. The very few lenders that charge for the valuations tend to have fees ranging £200 to £350, explains Habito. If you are remortgaging a property worth over £1 million, your valuation fee is likely to be a lot higher (£500+) and will increase with the property value.
• Application fee. This is sometimes known as a booking fee. It secures your new deal. The charge usually only applies with specialist lenders. Habito says you can expect to pay £250-£500. This fee is non-refundable.
• Arrangement fee. Lenders tend to have two mortgage types, one without an arrangement fee (also known as product fee) and a higher interest rate, designed for smaller mortgages, and another type with a fee and a lower interest rate, aimed at the larger mortgages. The fees are most commonly around £1,000, but can vary from £500 to £2,000. Some specialist lenders charge a percentage of the mortgage and many buy-to-let mortgages come with much higher fees £2,000.
  In terms of paying it, you can pay upfront to avoid interest or add it to your new mortgage.
• Broker fees. Commonly range from £500 to £1,500 or a commission depending on the value of the mortgage, which can be expensive. You can avoid paying this fee by using a fee-free broker. Another way to avoid it is by applying directly to the lender, but this means you may not get access to deals that are reserved for brokers only.

Read more: Five things to do now if your fixed rate mortgage deal is ending