The transfer of equity seems as though it`s a simple concept; as equity in a property is moved from one person to another, but as it`s a legal and sometimes sensitive issue, there can be a few stumbling blocks along the way.
Homeowners generally feel the need to transfer equity when there`s a change in their living arrangements, be it a married couple, a civil partnership or a cohabiting couple either deciding to share the mortgage between them, or through the breakdown of one of those unions, where one person will take on the house and associated mortgage.
Transferring equity can also be done for tax reasons, with parents moving technical ownership of a property to their offspring in order to make their tax spending more efficient, although this should be done only after taking independent financial advice.
Whatever your reasons, the transfer of equity is most easily done when there`s no outstanding mortgage to consider. However, you`ll still need to provide the right documentation on time and decide whether the property share should be equal or not.
If there is a mortgage to be paid, some lenders may not allow the transfer of equity or they will insist on a sizable payment to make it happen. This is especially the case when you`re removing someone`s name from the deeds, as the lender may have less security due to the reduction in potential earners paying into the mortgage.
This does present an opportunity for you to remortgage your property though and move to another lender and can facilitate you raising some additional money so you can pay your partner some money for the share of equity they are transferring to you. Of course, before you make this decision, you should pay keen attention to the costs and fees associated with any such a move and consider if you have any other ways to finance the equity transfer.
On a similar note, once your transfer of equity goes through, you may need to pay stamp duty on the deal if the amount being paid to the outgoing owner plus half of the existing mortgage debt is in excess of the current threshold, this varies but at the date of filming is at £125,000.
If you need to transfer the equity in your property through remortgaging it the we could help, visit firstchoicefinance.co.uk or call us on 0800 298 3000 or 0333 003 1505 if on your mobile.
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