What is a transfer of equity
A transfer of equity can be a convenient way to transfer ownership of a property in circumstances where the usual sale and purchase process isn’t required.
While there are a number of reasons for why a property may be transferred, two of the most common reasons we encounter are to either add a partner to a property or to remove a partner following the breakdown of a relationship.
If you are looking at entering into a transfer of equity there are a number of matters that you should take into consideration:-
1. Do you need consent to the transfer?
If you have a mortgage on the property that you are looking to transfer then it is likely that you will need the lender’s permission to change the ownership. This will be the case regardless of whether you are adding someone to the title or removing a previous borrower. Depending on the lender’s requirements for the specific circumstances in the transaction, they may also want to be party to and execute the Transfer Deed. If this is the case then you should expect the process to take longer than might have originally been anticipated.
2. Is the matter part of divorce proceedings?
Under a Consent Order, issued by the Court as a part of divorce proceedings, the transfer of property may be required to move the property into sole ownership. Consent Orders can often require the transfer to take place within a certain timeframe.
3. Will you need to pay Stamp Duty Land Tax?
Stamp Duty may be payable if there is a transfer of funds along with the transfer of property. Stamp Duty for transfers of equity will be charged if 50% of any existing mortgage plus any transfer of funds exceeds £120,000.00.
Stamp Duty will not be payable if the transfer is a part of divorce proceedings or if there is no payment made for the property being transferred.
4. Does the transaction involve a remortgage?
If you are remortgaging at the same time as your transfer of equity you may need to do searches on the property. Although you already own the property, the new lender will need to protect their interest and may require searches to be undertaken.
Some lenders will accept insurance in place of the searches which may help to reduce your costs.
Due to the variety of circumstances in which property changes hands by way of a transfer of equity there is no set timeframe for the process. Transfer matters can vary in complexity and at times can involve multiple third parties.
At Fiona Bruce & Co LLP we understand that entering into a transfer of equity can be a stressful and confusing process. We do our utmost to ensure the process is clear and that you are guided and advised every step of the way.
Contact us today and we will provide you with a free, competitive, no obligation quotation.