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Transfer of equity process explained
Transfer of equity process explained
What is Equity?
Equity is the amount of value you own in your property and is best shown by a simple equation:
Market Value of your property today – outstanding sum owed on your mortgage = Equity
Why might you want to arrange a Transfer of Equity?
You may wish to change how much of the property you own, or who owns equity in the property for a variety of reasons. Most commonly these include:
- Adding a spouse to your property’s deed if you have married or remarried
- Removing an ex-partner from a deed if you have divorced or separated
- Change the percentage share owned by co-owners of a property, or buy out a co-owner’s share
- Change ownership of a property for inheritance tax planning or personal capital gains limits
What are the steps involved in a Transfer of Equity?
Initial Checks
This will include gathering of key documents about the property, including: Title Deeds, Property Deeds and Client ID. The conveyancer will then check to see if there are any mortgages on the property and outstanding amount owed, as well as checks to see if any other restriction may affect a transfer of equity on the property
No Mortgage Transfer
- The existing and new owners signs a transfer deed that is then registered at the Land Registry.
- If the value of the transaction exceeds £40,000 a stamp duty certificate is needed.
Transfer of Equity with a Mortgage
- Checks will be made with the mortgage lender as anyone on the title after the transfer are liable for the mortgage. Therefore, the lender will want to check that the remaining owners or additional owners are able to maintain mortgage payments.
- Your conveyancer will contact the mortgage lender to request written consent for a transfer of equity. This may be conditional on a change of terms on the mortgage.
- If you are unable to gain consent for a transfer from your existing mortgage lender, you can either pay off the remaining sum owed on your mortgage or remortgage with a different lender who will agree to the transfer. Read our Guide to Remortgaging for more information on this process.
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