If you’re looking to add or remove a name from your home’s mortgage without remortgaging, a transfer of equity could be the right solution for you. Here’s what you need to know about this process and how it can benefit (or harm) your financial situation.
What is a transfer of equity?
A transfer of equity occurs when an owner adds or removes a name from their mortgage. This can be done for a variety of reasons, such as:
- Adding a spouse or partner to the mortgage
- Adding an adult child to the mortgage
- Removing a deceased spouse or partner from the mortgage
- Removing an adult child who is no longer living at home
A transfer of equity is a legal process that must be completed with the help of a solicitor. It’s important to note that a transfer of equity is not the same as remortgaging, which involves taking out a new mortgage with different terms.
What are the benefits of a transfer of equity?
There are several potential benefits of completing a transfer of equity, such as:
- You may be able to avoid paying stamp duty land tax (SDLT) on the transaction.
- If you’re adding someone to your mortgage, you may be able to access lower interest rates thanks to their good credit score.
- If you’re removing someone from your mortgage, you may be able to get a better interest rate on your loan.
What are the risks of a transfer of equity?
There are also some risks to be aware of before completing a transfer of equity, such as:
- If you’re adding someone to your mortgage, you may be putting your home at risk if they default on the loan.
- If you’re removing someone from your mortgage, you may need to take out a new loan with higher interest rates.
- The process can be complex and time-consuming, so it’s important to make sure you understand all the steps involved before getting started.
How long does the transfer of equity take?
The length of time it takes to complete a transfer of equity can vary depending on the complexity of the transaction. In most cases, however, the process can be completed within a few weeks.
Is a transfer of equity right for me?
Only you can decide if a transfer of equity is right for your situation. If you’re considering this option, be sure to speak with a solicitor to learn more about the process and make sure it’s the best decision for your needs.
Buying & Selling a Home
It’s important to have a solicitor help with the transfer of equity process.
A transfer of equity can be a good way to add or remove a name from your mortgage without remortgaging.
However, there are some risks involved, so it’s important to understand all the steps before getting started.
Inheritance
If you’re considering a transfer of equity, you may be able to avoid paying stamp duty land tax (SDLT).
Adding Spouses, Partners & Children
If you’re adding someone to your mortgage, a transfer of equity can be a good way to access lower interest rates.
Removing Spouses, Partners & Children
If you’re removing someone from your mortgage, you may need to take out a new loan with higher interest rates.
Giving Gifts
If you’re considering a transfer of equity as a gift, there are some tax implications to be aware of.
Transferring Equity in a Divorce
If you’re going through a divorce, a transfer of equity can be used to change the ownership of your home.
Making Home Improvements
A transfer of equity can also be used to finance home improvements. However, it’s important to make sure you compare the cost of the improvements with the cost of taking out a new mortgage.
Refinancing your home
In this instance, a homeowner would take out a new mortgage with different terms and use the proceeds to pay off their existing mortgage. This can be done for a variety of reasons, such as getting a lower interest rate or consolidating debt.
A transfer of equity can be a good way to add or remove someone from your mortgage without remortgaging.
However, there are some risks involved, so it’s important to understand all the steps before getting started.
Transfer of equity and remortgage process
The process for a transfer of equity is similar to that of a remortgage, but there are a few key differences to be aware of.
First, you’ll need to find a solicitor who can help you with the legal aspects of the transaction. Once you’ve found someone you’re comfortable working with, they’ll begin the process by:
- Requesting your mortgage payoff amount from your lender
- Drawing up the necessary legal documents for the transfer of equity
- Completing a title search on your property to make sure there are no outstanding liens or other issues that could complicate the process
- Registering the change with your local land registry office
Once all of these steps have been completed, the transfer of equity will be official, and the new name(s) will be added (or removed) from your mortgage.
Get Help from a Solicitor
The process of completing a transfer of equity can be complex and time-consuming. It’s important to make sure you understand all the steps involved before getting started. A solicitor can help you navigate the process and make sure it’s the best decision for your needs.
In Closing
As you can see, the process for a transfer of equity is similar to that of a remortgage. However, there are a few key differences to be aware of, such as the fact that you’ll need to find a solicitor to help with the legal aspects of the transaction and that you may need to pay stamp duty land tax on the property if you’re adding someone to your mortgage.
Overall, a transfer of equity can be a helpful way to add or remove a name from your mortgage without remortgaging. However, it’s important to weigh the risks and benefits carefully before moving forward with this decision. If you’re not sure whether a transfer of equity is right for you, be sure to speak with a solicitor or financial advisor who can help you make the best choice for your situation.