The short answer to the question is yes, you can transfer a mortgage to another person and there are several ways of doing this. Our latest article explores the most common approach, known as ‘Transfer of Equity.’ It's crucial to seek legal advice to ensure you're making the right decisions for your situation. Continue reading to gain a deeper understanding of the transfer of equity process.
What is Transfer of Equity?
This is where you transfer the ownership of your property to another individual. This could be following separation/divorce or maybe a bereavement. Or it could simply be that you are looking to add a partner or friend to your existing mortgage. You may have also inherited a property and wish to add your partner to the title.
Can a joint mortgage be transferred to one person?
A joint mortgage can be transferred to one person, providing your lender agrees to it - they will need to assess your income and expenditure to see if you meet their affordability requirements.
Can you buy a partner or spouse out of a joint mortgage?
Again, the short answer is yes – you can buy a partner or spouse out of a joint mortgage providing they and your lender agree to it. This is done by transferring their share of the mortgage to you and then they are released from any legal obligations associated with the mortgage. This may occur, for example, if a married couple with a joint mortgage are divorcing and one partner wants to have complete ownership of their mortgage and property.
Reasons for Transferring Equity in Property
Transferring equity in a property can be important for several reasons. You might want to ‘buy someone out’ or ‘gift’ them a share of ownership. When you buy someone out, the remaining owner(s) pay a set amount to the departing owner(s) for their equity share. Gifting, on the other hand, means transferring ownership without any payment involved.
Here are some common reasons to transfer equity in property:
Separation or Divorce: One partner may give their share to the other during a separation or divorce.
Marriage or Partnership: A sole owner can add their spouse or partner to the property title to share ownership.
Selling Your Share: You can transfer your equity by selling your portion of the property.
Gifting Property: You might decide to gift a property or a share of it to a child or family member.
Restructuring Financial Arrangements: Changing property titles can be necessary for tax benefits or inheritance planning.
Understanding the reasons and methods for transferring equity can help you make better decisions about your property ownership.
How to transfer your mortgage to your spouse or civil partner
If you wish to remove yourself or another party from your mortgage you would need to seek approval from your current lender. Another option would be to re-mortgage to a different lender and your mortgage broker will help simplify this process. Either way, you or your partner would need to meet the lender’s criteria and affordability assessment.
You will also need to engage with a solicitor to handle the legal side of things.
Do You Pay Stamp Duty (SDLT) When Transferring Equity?
When you or your co-borrower is taking on equity or a mortgage exceeding £250,000 in total, and the chargeable consideration is over £125,000, you may need to pay stamp duty. The exact amount you owe is determined using specific bands.
It's also worth mentioning that if you're giving up your interest in the property because of a divorce, you won’t have to pay SDLT. Knowing these rules can help you manage the financial aspects of equity transfers more easily.
Can I transfer my mortgage to a friend or family member?
If you own your property and want to transfer your mortgage to a family member, there are a few steps to follow. Essentially, you'll be selling your home to them, so they'll need to apply for their own mortgage. It's important to carefully consider the mortgage terms and how this might affect both of you. Understanding the process can help ensure a smooth transition and protect everyone's financial interests.
The Value Added by a Mortgage Broker
Transferring your mortgage can be complicated, especially if you're not familiar with the rules and regulations. Mortgage agreements often include a lot of legal jargon that can be hard to understand. Even if your lender lets you handle this process on your own, there’s still a lot of value in working with a mortgage broker.
Here are some key reasons to consider working with a mortgage broker:
Doing things the right way
An experienced mortgage broker can guide you on the best way to transfer your mortgage and help you achieve the right outcome. They can also connect you with legal professionals who can advise you on matters like your stamp duty obligations. A trustworthy broker will ensure that you aren't taken advantage of financially and that a mortgage transfer is the best choice for you.
Reducing stress during tough times
If you need to transfer a mortgage, it might coincide with a challenging time in your life, such as a bereavement or divorce. At Beechwood, we understand these situations, and our team will handle your case with professionalism and sensitivity, relieving you of one less worry. We'll take care of all the details involved in the mortgage transfer, allowing you to focus on your daily life.
Finding the best mortgage deal for you
With access to a wide range of lenders and their top products, a mortgage broker will search the market to find you the best deal on your new mortgage. This ensures that you get a mortgage suited to your needs and helps prevent any financial instability due to the transfer. A mortgage broker can also simplify the mortgage transfer process, making sure everything gets done quickly and efficiently.
Conclusion
In summary, transferring equity in property and managing mortgages can be complicated but is important for significant life changes like divorce, marriage, or financial restructuring. By understanding why equity transfers happen and consulting experienced professionals, you can navigate these processes effectively and make choices that support your financial goals.
If you're thinking about transferring equity or need help with your mortgage, feel free to contact our expert team at Beechwood. We're here to offer personalised advice and support to help you achieve the best results. Reach out yo us today to explore your options and find the right solution for your needs.
Published by Beechwood Mortgages Ref: 219335 with review and approval from Stonebridge Mortgage Solutions Limited who is authorised and regulated by the Financial Conduct Authority Ref: 454811.
