Remortgaging: Transfer of Equity, what it is and how it works
Remortgaging, or taking out a new mortgage on your existing property (either to replace the one you already have or to borrow a sizeable amount against your home) can be appropriate for a variety of reasons. Your current deal may be coming to an end, you might want a better rate, the value of your home may have increased, you might want to borrow more, or your personal circumstances could have changed.
Remortgaging also gives you an opportunity to transfer equity at the same time. Equity is the legal term for how much of the property you own. So, for example, if your home is worth £ 450,000 and your outstanding mortgage is £190,000, your equity is £260,000.
A Transfer of Equity means, in simple terms, a change to the legal ownership of the property. There are various reasons why you might want to do this, such as marriage, divorce, or as part of a tax planning strategy.
So, for instance, a single owner may want to add one or more people to the ownership of the property, or the joint owners of a property might want to transfer the property to just one name. Here are some typical scenarios.
Marriage, civil partnership or cohabitation
For example, if you own a house you may want to add your spouse or partner to the title deeds of your home. If you are remortgaging and your partner will be helping to pay off the mortgage, it can be a sensible move to get their name added to the property deeds. The ownership can be split 50:50 or divided into different percentages as appropriate.
A Transfer of Equity often involves one person buying the other out of their share of their home. A divorcing couple may need to change the ownership of their property, transferring their share in a jointly-owned property so that only one of them is the legal owner. This can be done by remortgaging with an existing lender or moving the mortgage to a new lender. The finance is provided by the mortgage lender to enable one partner to buy out the other person, and the Transfer of Equity will reflect the new legal ownership.
The legal process
We can act on your behalf for both the remortgage and the Transfer of Equity. We begin by reviewing the title deeds, and prepare the Deed of Transfer that all parties will need to sign.
It is important to note that a Transfer of Equity may involve stamp duty and (in some cases) Capital Gains Tax, and we can advise you if this is the case.
We will complete the transaction by returning a Stamp Duty Land Tax return to HMRC (even where no stamp duty is to be paid) and will register all new interests and charges over the property at the Land Registry. When this process is complete, it means that the property is formally registered in the names of the new owners.
What we offer
We’re known for offering a fast, reliable and cost-effective conveyancing service for both remortgaging and the Transfer of Equity, and will always work hard on your behalf to make the process as smooth and stress-free as possible.
To arrange an appointment to discuss your property needs with one of our Residential Property solicitors, call us on 0203 871 0007 or email