Excellent experience start to finish – always very responsive to any queries and the turnaround on the property I was buying was very quick, even in the busy time leading up to stamp duty deadline. Jenny was always very helpful and went above and beyond to close on a short timescale.
Ready to Refinance Your Property?
In a refinance, lenders will instruct their solicitor to review the Property as if the lender was about to become the owner. This includes full disclosure of relevant information held by both local bodies (they will expect you to obtain up-to-date searches for this purpose) and by you.
Refinances should be a relatively easy procedure. As you are already the owner of the Property the theory is that you should already have all the information that a lender needs.
Refinances can be delayed because information is not available or is not up to date. This checklist summarises what to have ready at the beginning of the transaction. If you do, you will significantly increase your chances of a smooth and efficient refinance.
How to refinance a property step 1: A question of security
“Security” is the name that lenders use to describe the types of controls they impose over your assets, examples include a legal mortgage (controls over real property) a debenture (controls over a company and all of its assets) and guarantees (controls over a person or entity and their assets).
You should first consider what kind of security you already have in place. A legal mortgage over real property will be obvious but think back to what other documents you signed when you purchased. Debentures, personal guarantees, and book debt facilities are examples of what needs to be considered. If you are not sure, speak to your current lender and ask for a list of the current security they hold and let them know that you intend to refinance.
Your new lender is likely to advise what kind of security they will require in the refinance. If you are offering an asset as security you should then make sure that asset is ready.
Step 2: Assets Ready? How can an asset be “ready”
You are likely to already have significant knowledge about the Property already but should ensure that you have the following to hand:
Get hold of your title plan from your initial purchase report or from your current solicitor. Does it include all of the land you think you own? If there are any gaps talk to a solicitor urgently about getting the boundaries corrected.
If you have carried out any work on the Property in the last 12 years you should provide any planning and building regulations documentation that was required. You will also be asked to confirm that planning conditions were complied with.
Indemnity Insurance policies
Indemnity insurance is used where there is a defect in the Property which cannot be easily or cost-effectively resolved by direct means. If you need an indemnity policy now the chances are that you needed it when you last refinanced/purchased. There is no point in paying for it twice although if there is a significant increase in value you may need to pay for an uplift in the value of the policy.
If the value of your Property is based on rental income you will need to ensure the tenancies sufficiently support that value. You cannot claim that you have a secure income stream for five or 10 years if the Tenant could up and leave within the month. We can conduct a lease check for you and prepare lender-compliant leases.
Statutory Reports (Fire Safety, Asbestos Report and Electrical Checks)
An up-to-date fire risk assessment should be carried out and acted upon where required. If your property was built before the year 2000 you will need proof that there is no asbestos in the Property or, if asbestos is present, an ongoing asbestos management plan. Most lenders require that electrical safety checks are carried out at Properties at least once every five years. If you have a tenant in place, and have statutory reports of their responsibility under the terms of the lease, ensure that they have done what they need to do and that you have copies of up to date documentation as the lender will want to see it.
Energy Performance Certificate (EPC)
Lenders will require that the EPC of an asset has at least an “E” rating. Where you have a tenant in place the rules on EPCs changed recently and you are legally obliged to ensure that the EPC is sufficient or an exemption is applicable and fully registered.
Step 3: Cash up front
In most refinances you will be expected to make payments at the outset to cover.
Searches (gathering publicly available information from public bodies)
Likely to cost in the region of £750 – £1,250 depending on the size of the property.
Lender’s legal fees
The lender should confirm their costs to you at the outset and will ask that you put your solicitor in funds for this amount. This will be payable whether or not the transaction completes.
The lender will arrange for the valuation and will confirm costs with you. This will need to be paid at the beginning of the transaction.
Help with property refinancing
Our commercial property solicitors can assist you in refinancing your property, conducting title corrections and updating your tenancies to ensure they are compliant with current lending terms. If you have any questions call Rosie Korcz, partner, at the Manchester office on: 0161 832 3304. In case you missed it, we’ve grown our residential property team with a new appointment. We also have some of the best Residential Property Solicitors in Manchester and Glossop area.
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