Equity is how much value is left in your property, minus the amount still owing on any mortgage. So, for example, if your home is worth £150,000 and you still owe £50,000 on your mortgage, then you would have £100,000 of equity. Transfer of equity is a change in co-ownership so that this pot of money is either split or shared with somebody else – for reasons which we will discuss below.
Why is a transfer of equity necessary?
There are a number of reasons why home owners seek a transfer of equity, including:
- Separation or divorce when one party wishes to leave and one wishes to remain living in a property
- Adding somebody to the deeds of a house – for example, if a home owner marries
- A need to alter the percentages of equity shared between co-owners
What’s involved in the transfer of equity process?
You’ll first need to provide the home’s title and contact a conveyancing solicitor who will check to see if any mortgage is outstanding and if there are any other issues with the property.
If there is no outstanding mortgage, the process is usually relatively simple and a conveyancing solicitor will prepare a transfer deed, which will then be registered with the Land Registry.
However, if there is an amount of money left to be paid on the mortgage, the mortgage lender will have to also agree to the transfer. This is because the new owners will become solely responsible for repaying the mortgage.
Occasionally, lenders can refuse or insist on a change in terms. Either way, it is a conveyancing solicitor who will handle communication and obtain written consent if the lender is in agreement.
What else should I be aware of?
If a lender refuses to the transfer, it might be possible to pay off the remaining mortgage by either seeking an alternative lender or paying in cash. Again, a trustworthy and qualified conveyancing service will ensure the transaction is carried out smoothly and seamlessly.
It is also worth noting that there may be Stamp Duty Land Tax to pay in England and Northern Ireland if the value of the amount being transferred is over the stamp duty threshold.
Talk to an expert about transfer of equity
If you’re thinking about transfer of equity and want to find a Solihull solicitor who can handle the process from start to finish on your behalf, call us on 0800 652 37 37 or get in touch to request a consultation.