If home owners wish to sell or give all or part of their property interest to another owner or owners – a situation which may arise for a number of reasons – a residential property conveyancing solicitor will need to liaise with the mortgage lender to ensure the ownership is legally transferred.
‘Equity’ is the technical name for the balance of money between any outstanding mortgage and the value of the property.
Typically, an equity transfer will arise when one borrower is released from or added to a mortgage. For example,when two people live together in a home originally bought by one partner and, conversely, when marriages or partnerships break down.
An equity transfer may also occur if a sole owner is having financial difficulties and wishes to add another owner with a better credit history than their own to the mortgage deed. An agreement of this sort may mean the original owner can then remain living in the home but as a joint mortgagee rather than attempting to keep up mortgage payments on their own.
To minimise tax payments, financial advisers occasionally suggest that a property may be transferred wholly or partly to another family member. However, this type of equity transfer should only be undertaken following specialist legal advice.
If an existing mortgage is to continue with the addition, or subtraction, of one or more owners, the mortgage lender has a right to refuse an equity transfer request. The lender will judge the ability of the new borrower to meet the financial commitment and may insist on certain conditions.
Often when transfers of equity are being made it is also a good time to remortgage; either by moving to a more financially-advantageous payment scheme and/or moving to a different borrower. Any new mortgage deed will need to be completed at the same time as the transfer.
As with all other property buying and selling transactions, owners and potential home owners should seek advice from an experienced conveyancing solicitor to handle the administration of transfers of equity.
Whatever the reason for requiring an equity transfer, a specialist property solicitor, who is used to the formalities of all types of home buying and selling, will help ensure the transaction is carried out efficiently and correctly.
The team at Healys believe great communication is key to a smooth transfer and everything about the transaction will be explained to clients in plain English.
Stamp duty will be payable on some transfers of equity and, although there will be legal fees to pay, there will be no ‘hidden extras’ with Healys. You can apply for an online quote or contact us in London or Brighton by email or telephone before you make a commitment.
If you want to regularise or change your property ownership and make a transfer of equity, by consulting Healys’ residential conveyancing solicitors, you can be sure of receiving the services of helpful, experienced professionals.