By Frances Traynor
11th December 2017
Written by Lorraine Imhoff
Our solicitors make the Transfer of Equity process simple.
A transfer of equity happens when an owner wants to add one or more people to the legal register of a property, or may want to remove one or more people other than themselves from this register.
Equity is simply the residual value of the property after any mortgage is deducted from the current market value.
For example, if your property is worth £250,000 and you have an outstanding mortgage of £100,000, you have £150,000 equity in the property.
It is possible to find yourself in a ‘negative equity’ situation, when the outstanding mortgage exceeds the current market value. This could happen when a buyer has taken out a high LTV (Loan to Value) mortgage and the value of the property has subsequently fallen.
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There are any number of reasons why you might wish to transfer equity in a property, such as a marriage or divorce. Homeward Legal are sensitive to the fact that there will be multiple parties involved in such matters.
In these circumstances, the future owner will need to ensure that they have made suitable arrangements with the mortgage lender. Homeward Legal are experienced in working with owners and lenders to ensure this process runs smoothly.
Once all parties are in agreement, an official document called a ‘Deed of Transfer’ is drafted for all parties to sign. Any existing mortgage formalities are also completed. If the new owner or part-owner is taking out a new mortgage, then we would also represent the lenders interests in completing this.
Transfer of equity matters are often accompanied by a remortgage. In these cases, Homeward Legal will treat the equity transfer and remortgage as one piece of work, aiming to complete this as soon as possible.
The post-completion formalities with an equity transfer are similar to those carried out on a purchase. An SDLT Form (Stamp Duty Land Tax Return) may need to be completed (even if no stamp duty is due).
The next stage is to register all interests and charges over the property at the Land Registry, at which point the property is formally registered in the new parties' name(s).