Residential Property –
What is Involved? -Transfer of Equity
What is a Transfer of Equity?
A transfer of equity (sometimes called a transfer of title) takes place when someone is added to or removed from ownership of a property. The term “equity” means the value of your property less any outstanding sum which you may owe on a mortgage. For example, if your house is worth £400,000 and you have an outstanding mortgage of £50,000 then your equity is £350,000.
For example, joint owners might want to transfer the property into the name of just one of them or a sole owner might want to add someone to the title – for example a partner or spouse.
Transfers of equity tend to be more straightforward than sales and purchases since usually searches and enquiries will not be made and normally there is no requirement for a contract.
Where it can become complicated is where there is a mortgage because you will normally need to get the consent of the lender before the transfer can happen.
What is Involved?
We will obtain an official copy of the title for the property and see if there are any mortgages on the property or whether other restrictions apply.
We will then look at the documents, check the identity of those involved and prepare the appropriate transfer document.
If there is no mortgage, then current and new owners will sign the transfer which will then be registered at the Land Registry. A stamp duty land tax certificate may be required.
If there is a mortgage, then the consent of the lender will be needed before the matter can be completed. This is because someone is either being added to the title who will become equally liable for the mortgage or being removed from the title and passing their liability to the remaining or new owners. In such cases the lender will want to make sure the new owners can and will repay the mortgage.
We will contact the lender for you and get written consent to the transfer. There is likely to be a charge by the lender for giving that consent.
In the event that the lender does not agree then you will need to repay the mortgage before you can go ahead with the transfer. This might be by paying off the mortgage or arranging a new mortgage with a new lender.