Remortgaging is when you pay off the original mortgage with the money you receive from a new mortgage, using the same property as security. People often remortgage to secure a more competitive interest rate.

The new mortgage is usually from a different lender, but the term ‘remortgage’ is sometimes also used when your new mortgage is with the same lender but is a different mortgage product.

What is a further advance?

The term ‘further advance’ is used for extra borrowing secured against a property in addition to the original mortgage advance. You will not be changing your original mortgage lender.

What is a remortgage with further borrowing?

This is when you remortgage but borrow more on the new mortgage than the amount required to pay off the original mortgage.

Why does Warwick District Council need to know if I change my mortgage?

Warwick District Council will need to approve any change in your mortgage. We will require a copy of the new mortgage offer, along with details of the amount to be repaid on your current mortgage, before we are able to consider giving consent.

If you are a shared owner, your lease will include a clause known as the Mortgagee Protection Clause. This offers protection to the mortgage lender in the event of repossession, but the mortgage lender will only be protected if Warwick District Council has approved the mortgage.

When you originally purchased your home, we would have approved the terms and conditions of the original mortgage to make sure that the lender recognised the type of property ownership and that you were not borrowing more than the share price. If you are changing your mortgage, we have to approve the terms and conditions of the new mortgage and check that you are not borrowing more than the amount required to pay off the original mortgage.

If you are a HomeBuy equity loan homeowner, the charge for your HomeBuy equity loan will be secured on the property after the mortgage. If that mortgage changes, we need to consent to the change in order for the new mortgage charge to be registered.

When you bought your home, Warwick District Council would have approved the original mortgage, the amount of your loan and checked the conditions. If you are changing your mortgage, we have to check the conditions of the new mortgage and that you are not borrowing more than the amount required to pay off the original mortgage before we can consent to the new charge.

What type of terms and conditions do Warwick District Council need to check?

In addition to checking the amount you are borrowing, we also need to check that you are on a residential, owner-occupier mortgage from a qualifying lending institution who know you have a shared ownership lease or a HomeBuy equity loan.

Why does Warwick District Council have to know if I want a further advance or further borrowing?

Warwick District Council has a duty to not only protect our financial interest in the property, but also the public funding we received that helped you buy your home. For this reason, we can only approve further borrowing or a further advance for specific reasons.

You will need to inform us what the extra money is for.

If it is to be used to carry out repairs to your home, you must provide us with estimates for the work. If you are altering the property (for example, building an extension) in addition to estimates, you will also need to apply for ‘consent to the alterations’ and provide any plans (if applicable) etc. We may also need details of your current household income to check sustainability based on your current situation.

The circumstances in which we are able to approve extra borrowing are set out in the funding regulations and will depend on what type of homeowner you are.

If you are a shared owner:

Under the Mortgagee Protection Clause contained within your shared ownership lease, we will only provide protection for further advances we have approved and that are:

• To allow you to buy extra shares in your home,
• To comply with other conditions of the lease, for example, repairs or improvements, and these must be agreed and approved with Warwick District Council, or
• To allow one joint leaseholder to buy out the interest of the other joint leaseholder.

The total amount of lending, including the principal mortgage, will not be able to exceed your percentage share based on the current property value and the mortgage lender, or the solicitor acting for the lender, will require our approval before the money can be advanced.

If you are using the extra borrowing to buy all of the remaining shares in your property, taking the percentage owned to 100%, we do not need to approve the mortgage as on completion the mortgagee protection clause will no longer apply.

If you are a HomeBuy equity loan homeowner:

Under the funding regulations, we are only allowed to approve further lending to finance repairs or improvements to the home if the borrowing is to be secured as a priority charge over Warwick District Council’s loan.

The regulations do not allow for further borrowing for other reasons. For example, debt consolidation, buying a car, or to pay for a holiday, and the amount of extra borrowing you can have is restricted by a formula for ‘headroom’ as set out in the funding regulations.

The headroom is the increase in the value between the original market value and the current open market value, and the amount of restriction is based on the percentage of the original loan.

For example (based on a 12.5% equity loan):

• Original valuation: £100,000 (87.5% of £100,000 = £87,500)
• Current valuation: £120,000 (87.5% of £120,000 = £105,000)
• Owners headroom: £17,500 (£105,000 – £87,500 = £17,500)
• Maximum amount of additional borrowing: £15,313 (£17,500 x 87.5% = £15,313)
• Total borrowing not to exceed: £102,813 (£87,500 + £15,313 = £102,813)

These restrictions are in place to protect the public money invested in providing the equity loan. We will have to issue a ‘Deed of Postponement’ to your mortgage lender or the

These restrictions are in place to protect the public money invested in providing the equity loan. We will have to issue a ‘Deed of Postponement’ to your mortgage lender or the solicitor acting for the lender agreeing to the extra lending before the money can be advanced.

What if I want to borrow extra money for a reason other than those listed above?

If you want further lending for any reason other than those listed above and the loan is to be secured against the property, it will have to be in the form of a secured loan and not be part of your mortgage.

Also note:

• If you are a shared owner: Any secured loan will be secured on your leasehold title only and will not benefit from the Mortgagee Protection clause.
• If you are a HomeBuy equity loan homeowner: Any secured loan will have to be placed on the charge register after both your mortgage and Warwick District Council’s charge. We will not postpone our charge.

Do I have to pay for a valuation for changing my mortgage?

If there is no further borrowing, Warwick District Council does not need to see a valuation of your property but will need to see a redemption statement from your current lender. The redemption statement shows how much is outstanding on the mortgage, and the amount of your remortgage must not exceed this figure.

If there is to be extra borrowing (for example alterations or repairs to your home) we will need to see a copy of the mortgage valuation unless your mortgage offer already states the mortgage valuation figure.

Your mortgage lender may charge you for a valuation, but Warwick District Council do not require an independent valuation unless you are borrowing more money to buy extra shares or redeem your loan.

If you are buying extra shares, please refer to our information on Staircasing.

Is there anything else I need to pay?

You will need to check if there are any redemption fees or penalties on your current mortgage for paying it off early. There is also likely to be a mortgage arrangement fee charged by the mortgage lender for the new mortgage and a fee for the mortgage valuation.

At the time of application, we will advise on any applicable administration fee for the extra work we have to do as a result of you wanting to change your mortgage or borrow more, or if you are altering the property.

Can you recommend a mortgage for me?

Warwick District Council staff members are not financial advisors and therefore cannot offer you any advice on mortgages or other financial products.

Remortgage checklist:

Checklist of what you will need for us to consider your request to alter your mortgage or to apply for consent for further lending:

• Current mortgage redemption statement
• New mortgage offer

Further borrowing or advance checklist: (in addition to above)

• Details of the reason for further lending
• Alterations request form, plans.
• Estimates for repairs or alterations (if applicable)
• Mortgage valuation (if not shown in mortgage offer)
• Details of household income

How do I start the process to remortgage?

Please complete the remortgaging form:

Shared ownership resale, staircasing or remortgaging application