When it comes to property, equity is the difference between the current value and the amount of any mortgage or loan secured against the property. This means it is affected by house price inflation/deflation in addition to the value of the repayments made.
What is a transfer of equity?
A transfer of equity is a way of changing the legal ownership of a property. It is required when adding or removing a person/people to or from the title deeds of the property.
The title deeds are legal documents that show who owns the property. A transfer of equity changes the ownership from a legal perspective.
Why would a transfer of equity be needed?
There are quite a few reasons why a transfer of equity may be required. These include:
– If a couple is divorcing/separating, their assets will need to be divided up (including any equity in the property).
– If someone is in a new relationship, they may wish to add their partner’s name to the title of the property.
– If the property is jointly owned but one party now wishes to buy the other one out.
– If the current owner wishes to add family members to the title.
Transfer of equity experts
There are a number of companies that specialise in transfer of equity and similar legal and financial processes. Many of these companies, such as https://www.samconveyancing.co.uk/news/conveyancing/transfer-of-equity-process-3894, have useful online resources for your perusal.
What is the transfer of equity process?
There are a number of key steps to be followed:
1. Apply for a remortgage/new mortgage
This is required because the ownership is changing and the equity is affected. If someone is being added, the lender will need to conduct credit checks (as the added party will become partially/equally liable for the mortgage repayments). If there is no mortgage, this step isn’t needed and the entire process is much simpler.
2. Instruct a conveyancer
Although usually less complicated than a standard sale/purchase, a conveyancer is still needed to guide this process and ensure all the paperwork is in order. They will deal with ID verification, checking the source of funds, and communicating with the mortgage provider.
It is important to note that if someone is being removed from the title, the respective parties will need separate legal representation. If someone is being added, both/all parties can be represented together.
3. Completion
The conveyancer will send the mortgage deed to be signed and deal with any transfer of funds that is required. They will also work out whether any stamp duty is payable, facilitate payment if necessary, and update HM Land Registry with the new details.
