When considering a mortgage transfer for the transfer of ownership for the equity in your home, you have two choices: either take on the process independently or seek the aid of a solicitor. This process is commonly recognized as an ‘equity transfer’.
An equity transfer pertains to the transfer of property ownership from one individual to another, which can occur for various reasons such as marriage or the passing of property ownership from a parent to a child.
During an equity transfer, you and your solicitor must complete several essential tasks. Before transferring property deeds and completing other legal documentation, a thorough examination of the property’s title deeds is necessary. The Deed of Transfer, also known as the TR1 Form, must be registered with HM Registry. Additionally, you must fill out the Stamp Duty Land Tax (SDLT) return form. It’s crucial to note that even if no stamp duty is applicable, completing the SDLT form is mandatory.
Furthermore, it’s important to be aware of potential complications when a mortgage is involved. Here are key points to consider:
Mortgage Transfer Complications:
In many equity transfer scenarios, the lender will require a remortgage to accommodate the change in property ownership. This is because the ownership composition undergoes alterations.
The lender will conduct additional background checks on the new owners. Most equity transfers involving a mortgage will necessitate a remortgage.
Releasing Joint Owners from Mortgage Terms:
If any joint owners are being removed from the property’s deeds, it will be necessary to release them from the terms and conditions of the mortgage.
Adding Joint Owners to the Property:
If you’ve recently married or entered into a new relationship and want to include a new name on the property’s deeds, this process is relatively simple and cost-effective, as at least one owner will remain.
The lender will assess early repayment terms and provide an estimate of the amount required to pay off the loan. You can choose to remortgage with the same lender or explore options with a different one, depending on your preferences.
It’s essential to demonstrate to the lender that the new owners can afford mortgage repayments, and obtaining a mortgage in principle (MIP) or decision in principle (DIP) is advisable before proceeding.
Buying Out a Co-Owner:
In cases of separation from a partner, buying out the other owner’s share of the property may be necessary.
To secure a mortgage for this purpose, you must provide proof of your ability to meet the loan payments. Failure to meet the lender’s affordability requirements may result in a mortgage application rejection.
Transferring Ownership as a Gift:
Transferring property to children can have potential inheritance tax (IHT) benefits.
If the property has an existing mortgage, it must be paid off before proceeding with the equity transfer. When transferring property to someone under 18, a ‘Deed of Trust’ is required to hold ownership until the individual reaches the age of 18.
Transferring property equity can be a complex process, especially when joint ownership is involved. However, with the guidance of a competent solicitor, the process can be navigated effectively. A professional solicitor can help you understand your obligations to your mortgage provider and guide you through the equity transfer process.
If you’re seeking a dependable conveyancer in Manchester, don’t hesitate to contact us. Conveyancing Expert offers top-quality conveyancing services to ensure your property transaction is supported by expert legal advice. We are dedicated, trustworthy, and committed to ensuring every client benefits from our expertise.