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Transfer of equity involves changing the ownership of a property, either by adding or removing someone from the title deeds or by changing the shares among existing owners. Read on to find out more about what it is and how transferring equity works.
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There are any number of reasons why you might wish to transfer equity in your home. Perhaps your partner is moving in and you’d like to own the property together, or maybe you want to give your adult children some security through giving them a stake in your property. Whatever the reason, find out how the process to a transfer of equity works.
In this article:
A transfer of equity changes the ownership of a property. You have to complete a transfer of equity when a property’s owner adds or removes a person (or people) to or from the title of their home, altering the ‘ownership’ of the property from a legal perspective.
Watch our transfer of equity video to find out more.
Get a quote for your transfer of equity today, simply select the remortgage option on our quote form, you can then explain further details when you speak to a member of our team
In relation to property, equity is a legal term that explains how much of a property you own. You can think of it as the value of the home minus any outstanding mortgage. So, if your property is worth £300,000, and you have £150,000 left to pay off on your mortgage, your equity would be £150,000.
When you transfer equity, you can either ‘buy someone out’, or ‘gift’ someone. When you buy someone out, the remaining person(s) pays an agreed amount to the leaving person(s) for their share of equity, whereas for a gift, no money will be exchanged for a share of ownership.
There are a few reasons why you might need to transfer equity in your property, reasons such as:
If a couple separate you will need to divide up assets including those tied up in a house
In a new relationship you may want to add your partner’s name to the title of your house
If you bought a house with a friend of investment partner and want to buy the other’s share
If you want to add family members, such as adult children to the title.
First, you’ll have to apply for a remortgage, or new mortgage. Because the property’s ownership is changing, affecting its equity, your mortgage provider will need to account for this. If you’re adding someone to the property’s title, then the mortgage lender will need to carry out checks as the new person(s) will become equally liable for the mortgage and repayments.
Speak to your mortgage lender or financial adviser about your options.
Because at least one party will remain in ownership, a transfer of title deeds is usually a much simpler process than a standard property sale or purchase. Nonetheless, you’ll still need to instruct a conveyancer to guide you through the process and help take you through the legal process. Get a personalised conveyancing quote for your transfer of equity.
You’ll need to provide official copies of the property’s title to your conveyancer, along with all contractual documents regarding any mortgages. Your conveyancer will then:
Verify ID
Check source of funds
Complete all legal work, including checking the TR1 form has been filled in correctly
Communicate updates to your mortgage provider
Communicate updates to the property’s freeholder
If someone will be joining your title, both parties can be represented together. However, if someone is to leave, the parties will need to have separate legal representation.
Finally, your conveyancer will send the mortgage deed for you to sign and then facilitate the transfer of any funds between parties. Outgoing parties will need to complete and sign an ID1 form, in the presence of their conveyancer.
Once completed, your conveyancer will calculate any stamp duty liable to HMRC and facilitate payment of it. They’ll also ensure details of the new ownership are logged with the land registry.
If there isn’t a mortgage, things are more straightforward. All parties just need to sign the transfer deed (TR1 form) and file it with the land registry. This needs to be accompanied by the land registry’s AP1 form, and if the value of the transaction amounts to more than £40,000, then a stamp duty land tax certificate may also be required.
First and foremost, you’ll have your conveyancing fees, which will be calculated on many factors, such as your property’s value or whether or not you need to remortgage. In most cases, the conveyancing will cost somewhere between £100 and £500 +VAT.
Your mortgage lender may also add their own fees, to cover their administrative costs involved with enacting the change.
Where a person(s) is taking on equity or a mortgage worth more than £250,000 in total, then stamp duty may need to be paid on it. The precise amount to pay is calculated using bands.
If a party is leaving the property’s title due to divorce, then no SDLT will be owed.
Due to the amount of legal work involved, it’s recommended you appoint a conveyancer to complete this work on your behalf and help push your transfer through.
If you’re making changes to the title of deeds with the Land Registry, you will need to remortgage, as your mortgage lender will need to consent to the changes and update the mortgage with the new details.
Get in touch with one of the team
If you would like to discuss a quotation you have received please call our Move Specialists on
0333 234 4425Monday - Friday
9am - 5pm
If you would like to speak to someone about your case please call the Conveyancing team on
0345 234 0240Monday - Friday
9am - 5pm
If you would like to email us, please send it to the following email address:
quotations@myhomemoveconveyancing.co.ukMonday - Friday
9am - 5pm
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