Remortgage to Pay Solicitor Fees

When Solicitor Fees Require Significant Funding

While routine legal work such as a simple will or a straightforward conveyance may cost a few hundred pounds, many legal matters are far more expensive. The costs can be unpredictable, particularly when disputes arise or proceedings become protracted.

Situations where solicitor fees commonly reach levels that require significant funding include:

• Divorce and financial settlements — contested divorces with complex financial arrangements can cost £10,000-£50,000 or more in legal fees
• Child custody disputes — where parents cannot agree on arrangements for their children, court proceedings can be lengthy and expensive
• Property disputes — boundary disagreements, rights of way disputes, and co-ownership conflicts often require specialist legal representation
• Employment tribunal claims — unfair dismissal, discrimination or breach of contract claims can involve substantial legal costs
• Probate and inheritance disputes — contesting a will or dealing with a complex estate can generate significant fees
• Business litigation — commercial disputes, partnership disagreements and breach of contract cases can be extremely costly
• Immigration cases — complex visa applications, appeals and judicial reviews require specialist representation

In many of these situations, the outcome of the legal proceedings directly affects your financial future. Underinvesting in legal representation because you cannot afford the fees can lead to worse outcomes that cost more in the long run. This is why some homeowners choose to release equity from their property to ensure they can fund proper legal support.

How Remortgaging for Legal Costs Works

The process of remortgaging to pay solicitor fees follows the standard capital-raising remortgage route. You replace your existing mortgage with a new, larger one, and the additional funds are released for you to use.

Estimating the costs: Before remortgaging, get a detailed estimate of the likely legal costs from your solicitor. Good solicitors will provide a cost estimate or budget, though they will usually caveat it as being subject to the complexity and duration of the matter. Ask about best-case and worst-case scenarios so you can plan accordingly.

Assessing your equity: Calculate the equity available in your property by subtracting your outstanding mortgage balance from your home's current market value. Remember that lenders typically cap borrowing at 85-90% of the property value.

Applying for the remortgage: You will need to provide the usual documentation including proof of income, bank statements, and details of your financial commitments. When asked about the purpose of the additional funds, be straightforward about the legal costs you are facing.

Timing considerations: Legal matters rarely wait. If you need funds urgently for court fees, barrister costs or a settlement offer, discuss the timeline with your mortgage adviser. A standard remortgage takes four to eight weeks, but there may be ways to expedite the process or arrange interim funding.

Releasing the funds: Once your remortgage completes, the additional funds are available in your bank account. You can then pay your solicitor's invoices as they arise. Some solicitors require funds on account before beginning work, while others bill monthly or at key stages of the matter.

It is worth noting that if you are going through a divorce, the remortgage situation can be more complex, as your spouse may have a claim on the property and its equity. Legal advice specific to your circumstances is essential in this case.

Remortgaging During Divorce Proceedings

Divorce is one of the most common reasons homeowners need to fund significant solicitor fees. However, remortgaging during divorce proceedings presents unique challenges that require careful navigation.

Joint property ownership: If the property is jointly owned, both parties typically need to agree to a remortgage. If your spouse or partner opposes the remortgage, you may not be able to proceed until the financial settlement is agreed. In some cases, the court can order that a remortgage be permitted, but this adds time and cost.

Sole ownership: If the property is in your name alone, you can remortgage independently. However, if your spouse has registered a matrimonial home rights notice (formerly known as a notice of home rights) with the Land Registry, the lender may be reluctant to proceed until this is resolved.

Impact on the financial settlement: Any additional borrowing you take against the property will reduce the net equity available for division in the financial settlement. The court will consider the overall financial picture, including any debts incurred during proceedings.

Legal Services Payment Orders: In some circumstances, where one spouse controls the family finances and the other cannot afford legal representation, the court can make a Legal Services Payment Order (LSPO) requiring the wealthier party to contribute to the other's legal costs. This is not available in all cases and requires a separate court application.

Costs orders: At the conclusion of proceedings, the court may order one party to pay a proportion of the other's costs, though this is relatively uncommon in financial remedy proceedings. It is unwise to rely on a costs order to recover your fees.

If you are going through a divorce and considering remortgaging to fund legal costs, it is essential to discuss this with your divorce solicitor before approaching a mortgage adviser. The legal and financial aspects are closely interlinked, and decisions made about one can significantly affect the other.

What Lenders Consider When You Are Funding Legal Costs

Lenders approach applications for legal cost funding in much the same way as other capital-raising remortgages, but there are some specific considerations to be aware of.

Affordability: This is the primary concern for any lender. They need to be satisfied that you can afford the higher monthly payments on a larger mortgage, taking into account your income, existing debts and regular expenditure. If you are going through a divorce, your income situation may be changing, which can complicate the assessment.

Purpose of funds: Most mainstream lenders accept legal costs as a legitimate reason for additional borrowing. However, some may want more detail about the nature of the legal matter. Being transparent and providing as much information as you are comfortable sharing will help the application proceed smoothly.

Ongoing proceedings: If you are in the middle of litigation, lenders may consider this as a potential financial risk. The outcome of legal proceedings can affect your financial position significantly, and lenders may factor this into their assessment. Your adviser can help present the application in a way that addresses these concerns.

Divorce-related complications: If you are remortgaging a jointly owned property during divorce proceedings, lenders may require evidence that both parties consent to the remortgage or that the court has approved it. This can add complexity to the application.

Credit history: As with any mortgage application, your credit history will be reviewed. If the financial pressures that led to legal proceedings have also caused missed payments on other debts, this could affect your options. A specialist broker can identify lenders with more flexible criteria.

Working with an experienced mortgage adviser who understands the nuances of remortgaging for legal costs is particularly valuable in these situations. They can anticipate potential issues and guide you towards lenders most likely to approve your application.

Managing Legal Costs Effectively

Before remortgaging, and indeed alongside it, there are steps you can take to manage your legal costs more effectively. This can reduce the amount you need to borrow and give you more control over the process.

Get detailed cost estimates: Ask your solicitor for a clear breakdown of estimated costs, including their hourly rate, the likely number of hours, court fees, barrister fees and any disbursements. A good solicitor will provide this willingly and update it as the matter progresses.

Agree a billing arrangement: Discuss how your solicitor will bill you. Options include monthly billing, stage billing (at key milestones), or payment on account where you pay a lump sum upfront that is drawn down as work is done. Understanding the billing cycle helps you plan your finances.

Set a budget and communicate it: Let your solicitor know your budget constraints. A responsible solicitor will work within your budget where possible and warn you in advance if costs are likely to exceed estimates. Do not be afraid to ask about less expensive approaches or whether some tasks can be handled more efficiently.

Consider alternative dispute resolution: Mediation, arbitration and negotiation can be significantly cheaper than court proceedings. Many legal matters can be resolved without going to trial, saving both time and money. Courts increasingly expect parties to attempt alternative dispute resolution before issuing proceedings.

Check if you have legal expenses insurance: Many home insurance policies include legal expenses cover that can fund certain types of legal proceedings. Check your policy or contact your insurer to see if your situation is covered.

Explore no-win-no-fee arrangements: For certain types of case, particularly personal injury and some employment claims, solicitors may offer conditional fee arrangements where you only pay if the case succeeds. This is not available for all types of legal work, but it is worth asking.

By actively managing your legal costs and exploring all available options, you can minimise the amount you need to borrow through your remortgage and keep the financial impact as manageable as possible.

Alternatives to Remortgaging for Solicitor Fees

Remortgaging is one option for funding legal costs, but it is not the only one. Consider these alternatives before committing to additional secured borrowing.

Personal loan: For more modest legal costs, an unsecured personal loan may be appropriate. The interest rate will be higher than a mortgage, but the debt is not secured against your home and is typically repaid over a shorter period.

Secured loan (second charge mortgage): If you do not want to change your existing mortgage deal, a second charge lets you borrow against your equity without disturbing your first mortgage. This is particularly useful if you have a competitive rate you want to keep or would face significant early repayment charges.

Credit card: For smaller, shorter-term legal costs, a credit card, particularly one offering an introductory 0% interest period, could be a practical option. However, credit card interest rates are high if you do not clear the balance within the promotional period.

Legal aid: While legal aid has been significantly reduced in recent years, it is still available for some types of case, including domestic abuse, certain immigration matters, and some family disputes involving children's welfare. Check your eligibility through the government's legal aid checker or speak with a legal aid solicitor.

Litigation funding: For commercial disputes or high-value claims, specialist litigation funders may agree to fund your legal costs in exchange for a percentage of any award or settlement. This is typically only available for stronger cases with a realistic prospect of a significant financial recovery.

Borrowing from family or friends: While this avoids formal borrowing, it carries its own risks to relationships. If you take this route, put the arrangement in writing to protect both parties.

Payment plans with your solicitor: Some law firms offer payment plans or staged payment arrangements for clients facing financial constraints. It is always worth asking your solicitor whether any flexibility is available.

A mortgage adviser can help you compare the overall cost of each option, taking into account interest rates, fees, repayment terms and the impact on your long-term financial position.