Can you remortgage a house if it has been gifted to you?

Answered on 24 April 2018

I have recently had a house gifted by my parents. The house is worth around £190,000. Can I remortgage this property?

Considerations When Remortgaging A Gifted Property

When you take out a new mortgage, you’re normally offered an introductory deal – a reduced rate for a set period and certain freebies, like a free legal service or valuation. Buying a property with a gifted deposit is no different, it means you could still be on the introductory deals which can range in length, then once the deal ends, you’re moved onto that lender’s standard variable rate (SVR). Their SVR is usually much higher than their introductory rates.

In the main, there's no reason why you shouldn't be able to remortgage this property. The only area that might be an issue is if you haven't owned the property for at least 6 months. Otherwise it would be a straight forward case of meeting the lenders standard criteria and selecting the right product for your circumstances.

You can start to organise your next mortgage up to 6 months before the end of your existing rate. However if you are looking to remortgage earlier than that - but you’ll usually have to pay an early repayment charge to your current lender. An early repayment charge is a penalty fee that’s applied if you repay your mortgage during the initial deal period. The charge is usually a percentage of your outstanding mortgage debt and can amount to a significant sum.

Remortgaging can be tricky, especially remortgaging early as you have to be sure it is the best thing for you.

If you would like to know more about remortgaging, read our guide or you can call us direct on 0330 433 2927 and we can assist you.

People Also Asked - Remortgaging

Are there any other costs involved?

Yes, there are still many other fees to think about, including legal, homebuyer's report or survey, early repayment charges, lender's booking and arrangement fees, broker fees and valuation fees.

What's the process for remortgaging?

A remortgage can take, on average, 4 to 6 weeks. Likewise it can also take much less or potentially longer depending on the complexity of the application.

Our remortgage process is usually as follows: 

  1. You contact your current lender for a redemption statement. The statement shows how much is outstanding on your current mortgage on a specific day and any fees associated with repaying it
  2. Your personal mortgage adviser searches around the market and finds the best remortgage deal for you
  3. If you are happy to proceed, your adviser presents your current situation to the new lender for a Decision in Principle (DIP)
  4. Assuming the DIP is successful, your adviser goes through the proposed mortgage illustration and walks you through the full mortgage application, which they then submit on your behalf. You supply relevant documentation, e.g. passports, pay slips, tax calculations, bank statements, proof of address, etc.
  5. Your new lender requests a valuation report for your property. Your appointed solicitor then requests title deeds together with any lease that may be present and any extra questions that may need answering
  6. After your lender approves your mortgage application, you and the solicitor arrange a completion date. This is the date the solicitor draws the “new” money down from the new lender and uses it to clear the balance with your current lender.  Any money left over is paid to you

Ask The Mortgage Experts answers are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them. We recommend you seek professional advice with regard to any of these topics where appropriate.