Owning a home can be one of the most significant financial commitments an individual or couple makes. As life progresses, circumstances can change. Maybe you’re in a committed relationship, or you’ve recently gotten married or entered into a civil partnership, and you’re considering bringing your partner into the property title. This is where the process of remortgaging to add a partner, commonly known as a transfer of equity, comes into play.

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Understanding the Transfer of Equity

A transfer of equity is essentially a process where the ownership of property changes – but the property itself doesn’t change hands. For those already with a current mortgage, it might involve adding or removing a person from the property deeds. This is a common situation for a married couple or those in a civil partnership, especially when one partner originally held a single mortgage.

Why Consider Remortgaging?

The benefit of remortgaging and adding a partner can be manifold. For one, combining incomes could mean you’re eligible for a larger mortgage loan or favourable rates, given that affordability checks will take both parties’ income into consideration. If both of you have a stable employment situation and a good credit history, the chance of mortgage approval at competitive rates increases.

However, it’s essential to keep in mind that each mortgage provider will have its own affordability criteria, and while one might allow borrowing up to 5x annual income, another might have stricter criteria. It’s a common query mortgage brokers receive, and they can offer mortgage advice tailored to each couple’s current income and financial situation.

Affordability and Credit Checks

Before proceeding with the mortgage application, most mortgage lenders will run credit checks on both parties. It’s crucial to be aware of how a bad credit score can impact the process. For instance, while one partner might have a stellar credit history, the other’s combination of credit issues might pose challenges. Factors like late monthly repayments, unresolved credit agreement disputes, and even defaults on utility bills can play a part.

However, all hope isn’t lost for couples where one has a bad credit score. There are specialist mortgage brokers and bad credit mortgage providers who can help you to apply for a mortgage with bad credit.

Additional Considerations

Apart from the affordability and credit checks, there are some other factors to take into consideration when adding a partner to the property title. These include changing the ownership structure of the property from sole ownership to joint tenancy or tenants in common, depending on your circumstances. This change can have legal and tax implications, so it’s essential to seek professional advice from a solicitor or qualified accountant.

The Bottom Line

If you’re considering remortgaging and adding a partner, the best first step is to speak to a mortgage broker who can help you understand your options, eligibility criteria, and the legal implications of transferring equity. It’s also essential to take into account both your credit scores and your affordability when considering remortgaging or applying for a new mortgage. With the right advice and preparation, you should be able to find the best mortgage deal to suit both of your needs.

The Legal Process

Here’s where the conveyancing solicitor steps in. The legal process for a transfer of equity can be intricate. It involves changing the title deeds, ensuring that there’s a joint agreement, possibly crafting a cohabitation agreement or a common agreement depending on the relationship status, and ensuring that there are no wider implications like inheritance tax planning overlooked.

For those unfamiliar, title deeds are legal documents showing the ownership of a particular property. In the case of a joint mortgage, this might be changed to ‘joint tenants’, meaning both parties own the entire property and have equal rights over it.

Additional Costs

While remortgaging and adding a partner can seem like a straightforward process, one cannot overlook the additional costs that can sum up to thousands of pounds. Some of these include:

  • Stamp Duty: Depending on the property prices and the amount of the mortgage loan, you might be liable for stamp duty. It’s always wise to check the current stamp duty threshold or see if you qualify for any discount on stamp duty.
  • Legal Fees: Solicitors, with their expert advice, do not come cheap. Costs for their services can vary, and it’s always recommended to get quotes from multiple sources.
  • Mortgage Fees: Some current mortgage deals might have repayment charges, especially if you’re switching your mortgage lender before your current mortgage term ends.
  • Valuation Fees: Before deciding on the transfer of equity, mortgage providers will require a property valuation to determine how much can be borrowed.

Professional Advice

The path of remortgaging to add a partner is trodden by many, but given the complexities involved, seeking professional advice can be invaluable. Mortgage experts, whether from Virgin Money, NatWest Rooster Money, or Nuts About Money, can provide guidance tailored to your needs.

Expert mortgage advisers can elucidate on topics ranging from the usual checks like credit scoring and eligibility checks to more intricate matters like the impact of a marital status change on a current mortgage or scenarios like a mortgage after divorce.

Final Thoughts

While the decision to remortgage and add a partner comes from a personal space, reflecting shared commitment and trust, it’s essential to approach the entire process with eyes wide open. Understand your financial agreement, assess the ongoing costs and the potential financial costs of the future, and always keep the lines of communication open. Both partners should be in agreement, ensuring the process aligns with their long-term goals and current situation.

In today’s challenging times, with fluctuations in property prices and the cost of living crisis, adding a partner to a mortgage might seem like a daunting task. Still, with the right guidance, a clear understanding of your current rate and the wider implications, and a forward-looking approach, it can be a beneficial move for many.

About The Author

mortgage broker damian youell

See some of Damian’s client reviews below

Damian is an experienced mortgage broker, founder of NeedingAdvice.co.uk Ltd and company director. With over a decade working as a mortgage broker he has a strong understanding of hard to place mortgage cases. With hundreds of 5 star client reviews. hundreds of repeat clients his work speaks for himself.

He started NeedingAdvice.co.uk as a one man band with the philosophy of putting clients needs ahead of his own. This ethos of offering excellent customer service has helped the business grow over the years. He gets satisfaction on getting cases pushed through to offer stage where other mortgage broker and companies have failed.

Throughout his time as an adviser he has carved out a niche area of advice helping clients with their business protection requirements too. Having helped hundreds of client with Relevant Life Policies, Shareholder Protection Insurance, Keyperson Policies and other important protection requirements of large to small businesses.

At home he is a family man and likes to spend his time with his four children and wife Lisa. He enjoys going on holidays spending time with friends and going for walks.