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‘Transfer of equity’ refers to the change the legal ownership of a property by the formal process of adding or removing someone from the title deeds of the property.
Reasons for Transfer of Equity.
There are many reasons why you might want to change the legal ownership of your property.
Divorce or Separation – It may have been agreed or ordered at Divorce for the ownership of the property to change.
New Relationship – You might wish to consider registering your new partner as a joint owner of your property if you have started living together and intend the property to be your joint home.
Tax Efficiency – Some owners sometimes transfer equity to their children or other family members to be more tax efficient.
Gift – you may wish to transfer the whole or part of your property to someone as a gift.
Investment – you may agree that another party acquires a share of your property in return for cash.
What if you have an existing mortgage?
When transferring equity, there are additional factors to consider if you have a mortgage or other charge secured on your home, which the majority of individuals do.
Firstly, you will need to obtain the written consent of the lender before the transfer process can be completed. Without the consent of the lender, the Land Registry will be unable to register the change of ownership in respect of the legal title.
The lender may stipulate that the mortgage must be redeemed, or the new party added to the current loan by way of a new mortgage deed before they will consent to the change of legal ownership.
Similarly, when someone is removed off the title, they are simultaneously seeking to remove themselves from the credit agreement represented by the mortgage. You can’t just walk away from a credit arrangement as you can from any other: you have to first resolve the debt you still owe.
If the existing mortgage is to be kept by the person whose name will stay on the property, the lender must be satisfied that that person will be able to make the required mortgage payments on his or her own.
Usually, a new mortgage will be incepted by the remaining owner in their sole name so that the outgoing party can be released from the obligations under the existing mortgage.
If a new owner is being added to the legal title to your property, then it is sometimes the case that there will need to be a new mortgage in the joint names of the new owner and the current owner.
How much does a transfer of equity cost?
At Laker Legal we specialise in all aspects of the transfer of equity process and can offer a fixed fee from £450 plus VAT to carry out the legal work for you.
There will also be a cost to the Land Registry which you must pay when changing the title deeds. This cost is calculated by reference to the deemed value of the property which is being transferred.
There could also be stamp duty if you are buying a share of the property or taking on a mortgage in excess of £125,000.
If you would like to discuss further and obtain a written quote then please contact us today.
Laker Legal Solicitors are on the panel of the majority of major mortgage lenders and so should be able to assist you in your proposed transaction.