How to switch your mortgage to a new provider

When you have a mortgage in place over your property you might find yourself in a position where you can switch mortgages to get a better deal.   While the procedure for switching mortgage providers is relatively straightforward, you will need a solicitor to act for you.

The agreement you make with a new bank will be facilitated by a broker who will look for a better rate of interest than that currently being paid by you.  They will also look for more favourable terms in other aspects of the mortgage and will ensure that the new sum borrowed will be enough to discharge your current loan.  Most re-mortgages of this nature will involve borrowing an extra sum of money over and above that currently owed so that there is a balance available to you once your current mortgage has been discharged.

Once the new mortgage has been agreed, you must engage a solicitor who will act for you.  They will arrange for you to sign an Authority to your original mortgage bank so that your solicitor can access the legal documents pertaining to your property.

Banks hold the title deeds to every property over which they have given a mortgage.  For that reason, when you initiate the switching process your solicitor will arrange for you to sign an authority, addressed to your bank, instructing them to release the title deeds to your solicitor so that they can process the transaction.

Of course, they will only release the deeds once they know that the remaining monies due to them are going to be paid off in full and they will only release the deeds to a solicitor who will ensure that this will happen.  For that reason your solicitor will have to provide an undertaking to the bank whereby they will arrange for the bank’s mortgage to be discharged in full and if they cannot do this then they will return the title deeds to the bank.

Your solicitor will also ask the bank to provide them with details of the amount that is needed to pay off the mortgage in full.  This figure is called the “redemption figure” or “redemption sum”.

At this point, your new mortgage provider will issue a letter of loan offer and they will send this to your solicitor together with a number of documents that are contained in a loan pack.

Once your solicitor receives the loan pack, they will call you in to their office to sign the following documents:-

  1. The letter of loan offer which you’ll have to sign to formally accept the bank’s mortgage.
  2. An authority to your solicitor, nominating them to act on your behalf with the new mortgage provider.
  3. The mortgage deed itself.
  4. Family Home Declarations.
  5. Assignment of the life policy.

Once these documents have been returned to your new bank, your solicitor will be able to work with the bank and provide any additional information that they might need.  You may also be required to submit some more documents eg up-to-date payslips etc.

When your new provider is satisfied, they will authorise drawdown and the monies will be paid into your solicitor’s bank account.  At this point the mortgage has formally switched and you are bound to discharge the instalments to your new bank from this point on.

At this stage, your solicitor has some additional work to do, including registering your mortgage as a charge against the property and removing any reference to your old bank.  This transfer is completed in the Property Registration Authority offices and your solicitor will then be issued with a document called a folio.

The folio shows you as the registered owner of the property and it will now show that your old bank no longer has any interest in the property but your new bank has a charge in place.

Your solicitor will put this folio with the title deeds of the property and then send them back to your new bank where they will be held for the duration of the mortgage.

Like all legal transactions, the most important thing to do during a mortgage switch is to keep things running smoothly by dealing with each matter as it arises and not allowing anything to go on the long finger. A switch shouldn’t take more than a few weeks to complete and obviously this will depend on the time taken by each bank to provide the documentation needed.

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