How to change names on transfer of equity remortgage
There are a number of reasons why you might want to change the names – by adding new or deleting existing names – on the title deeds of a property.
The Yorkshire Building Society suggests a few of those reasons:
- you get divorced or are separated and want to transfer joint ownership into sole ownership by one of the names on the title deeds;
- you get married and want to transfer sole ownership of your home into joint names;
- you want to remove the name of a joint owner and add someone else; or
- you want to add a new owner if the former owner dies. This article explains what you need to know in these situations.
What is a transfer of equity remortgage?
In that process of adding or removing names – and whether any money changes hands or not – you are transferring equity in the property. For that fact alone, you need to advise any mortgage lender with an interest in the property of the proposed transfer of equity.
If the property is already subject to a mortgage, the person transferring ownership or equity needs to be released from the contract with the mortgage lender. The mortgage lender is – in these circumstances – one of the parties involved and therefore needs to give its consent.
When considering its consent, the mortgage lender needs to assess the remaining mortgagee’s income, expenditure, and credit worthiness – in other words, the affordability of the mortgage for the remaining mortgagee. Alternatively, a new lender may be found through the application for a new mortgage.
Effectively, the property is remortgaged – a transfer of equity remortgage – with the revised names on the property’s title deeds now also the mortgage holders. If the lender does not consent to the proposed transfer of equity the pre-existing contract remains, and the former joint mortgagee may still be liable for his or her share of the outstanding mortgage debt.
How do I change names on a transfer of equity remortgage?
Changing names on a transfer of equity is a legal process. If there have been two joint owners of a property, for example, and one wants to buy out the other to become the sole owner, that requires the legal change of names and ownership.
As conveyancing specialists Really Moving recommend, the owner who is buying out the other party must be represented by a solicitor or conveyancer. The owner who is being bought out may choose whether or not they want legal representation – but, as in any legal transaction, legal advice may be the prudent choice.
Where that transfer of equity also requires a remortgage, the lender must approve the application for the addition of a new name – or the removal of a former name, in the event of a change from joint to sole ownership.
When considering that approval, the lender is going to assess the affordability of the remortgage to the new or remaining mortgagees. That assessment is similar to any other calculation of affordability – it is based on the financial status of the proposed mortgagees, including their income and expenditure, handling of past and current debt and credit, and credit ratings maintained by the credit reference agencies.
When the terms of the equity transfer have been agreed – including any payments agreed between the parties – the agreement of the existing mortgage lender can be sought or a remortgage with a new lender arranged. The transfer deed on the title of the property can then be signed and witnessed. The transaction is complete.
Can a joint mortgage be transferred to one person if I am self-employed?
As explained, the transfer of a joint mortgage to a sole mortgage involves an equity transfer – the name of one of the former joint owners is removed and a single owner remains. If the property is subject to a mortgage, the existing lender must approve the transfer of equity or a remortgage needs to be arranged.
If the person who is to be the remaining sole owner is self-employed, that is taken into account by the mortgage lender when assessing the affordability of the equity remortgage.
Self-employment helps to define your financial status and many mortgage lenders these days are accustomed to assessing the affordability of loans to the self-employed. Typically, for example, that assessment is likely to be informed by 12 months of your accounts in self-employment. If you are continuing in the same line of work as when you were employed, some lenders may even reduce the full, 12-month period of accounts.
How long does a remortgage and transfer of equity take?
The individual circumstances surrounding any change of ownership of a property, transfer of equity, and remortgage are likely to differ. This affects the length of time the transfer of equity and remortgage may take.
Solicitors Irwin Mitchell suggest that the process typically takes between four and six weeks – but, of course, this may be longer if the circumstances are more complicated.
Is stamp duty payable on a transfer of equity?
The calculation of Stamp Duty on a transfer of equity may be relatively complicated. At its simplest, Stamp Duty is usually payable on the amount of mortgage debt newly taken on – by a partner taking on joint ownership of a property as a joint mortgagee, for example. In other cases, though – such as the removal of a name following divorce or separation – it is unlikely that you will need to pay Stamp Duty.
There are a number of reasons why you might want to change the names on the title deeds to a property.
The addition or removal of names is achieved through the legal process known as transfer of equity.
Where the relevant property is also subject to a mortgage, the mortgage lender must be informed of – and needs to approve – the proposed transfer of equity. The property is effectively remortgaged.
Here at Needing Advice, we are ready and waiting to help you through any such transfer of equity – including the implications for your mortgage.