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What should you consider when remortgaging?

As the property market in Northern Ireland continues to thrive, and the increased demand pushes up property prices, more and more homeowners are taking advantage and remortgaging to free up capital.

After spending over a year at home in and out of lockdown, it will come as no surprise that a recent survey found that 62 per cent of homeowners want to carry out renovations this year with 37 per cent planning to remortgage their property in order to do this.

Before remortgaging, to release capital for whatever reason, it is important that you have a clear idea of how much money you realistically need to free up and that you can afford to pay the increased repayments.

Make sure you get the correct advice from a qualified financial expert, check your credit score and check for any hidden costs that might be associated with your current mortgage or the new mortgage deal.

At McKees, we find a lot of clients come to us confused with some of the terms associated with remortgaging their homes so we created a simple A-Z guide to help simplify things. For example:

  • Completion – once all legal matters have been resolved a Completion Date will be arranged when mortgage funds will be drawn down from your new lender and your existing mortgage will be repaid. 
  • Deeds – the Solicitor instructed will require the title deeds to your property to review to enable drawdown of funds.
  • Early Repayment Charge (ERC) – you may be liable to pay a penalty if you complete your mortgage within the discounted period with your existing lender.  It is important to advise your solicitor of the date on which the ERC ends as soon as possible.
  • Fee Free – many lenders now offer free legal services for your remortgage in which the bank will be responsible for all legal fees.
  • Housing Association – you may have availed of assistance from the Northern Ireland Co-Ownership Housing Association to purchase the property.  You can use the opportunity of a remortgage to buy-out the Housing Associations equity interest in the property.
  • Mortgage Deed – this is the formal contract between you and the lender.  The lender will require you to sign the mortgage deed to secure the money they are lending you.
  • Negative Equity – this can occur when the value of your property falls below the amount remaining on your mortgage.  At completion, you may be required to provide your Solicitor with additional funds to ensure repayment of your existing lender.
  • Product Transfer – you may wish to remain with your existing lender but avail of a new and better product at the end of your existing deal.
  • Redemption Figure – the amount required to redeem your existing lender.  This will detail all monies due and owing by you up to the Completion Date.