Transfer of equity FAQs

A transfer of equity will occur where a sole owner of a property adds one or more people to the ownership, or where an existing owner of the property sells their share to those owners who will remain.

The legal process that applies is relatively straightforward. The main issues to have a mind are whether the proposed transfer of equity is dependent upon a remortgage, or whether one of the parties is required to raise monies to purchase the other parties share.

It sometimes necessary for a remortgage to happen alongside a transfer of equity but it is not an absolute rule. A remortgage can sometimes be said to be more likely where one co-owner is acquiring the other co-owner’s share so that the acquiring party becomes the sole owner of the property. In these circumstances any existing mortgage lender would need to give their consent to the mortgage being transferred into the sole name of the retaining party. The lender’s consent would be based on their normal lending principles and the retaining party will be required to demonstrate that they can meet the lender’s affordability criteria.

If this is something that you are willing to do then you are at liberty to make your partner a joint owner. Adding your partner to the property’s title deeds will require the consent of your mortgage provider and it is likely that your mortgage company will insist that your partner becomes a party to the mortgage. You would be wise to take legal advice before making your partner a joint owner because you may well need a property ownership trust drawn up if you will be owning the property in unequal shares. It would also be wise to consider entering into a co-habitation agreement.

This is the sort of scenario that is covered by a transfer of equity. If it has been agreed that you will be acquiring your ex-partner’s share in the property that this agreement can be formalised by reason of a transfer of equity. The transfer will probably be conditional on your lender agreeing for the mortgage to be transferred into your sole and you will no doubt need to pay your ex-partner the value of their equity. In the event that you existing mortgage lender is not willing to transfer the mortgage into your sole name you will need to find a new lender and this will require you to complete a remortgage alongside the transfer in equity.

Under the terms of a jointly held mortgage each party will remain liable to pay the monthly payments until the lender has agreed to release the party who has left the property. This means that even if you have left a property you remain fully liable for the mortgage and you can be pursued for any missed payments and arrears. By completing a transfer of equity and a simultaneous remortgage you are ensuring that you are released from your former obligations.

The transfer of equity process can be used to change the ownership shares of the co-owners of jointly owned property.

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