If you currently own your home, either by yourself or as a couple, there may come a time when you want to legally transfer full or part ownership of it to yourself or someone else. It can be a straightforward process, but there are often factors that can cause complications along the way. As transfer of equity specialists, MJR Solicitors can always help you, but this guide takes a deeper look at the process as a whole and answers the ‘what is a transfer of equity?’ question, as well as what it means and how you can do it properly.
Transfer of equity
When we talk to clients about the process of a transfer of equity, we’re often asked how it, and the whole conveyancing process, works, and more importantly, what is a transfer of equity? In simple terms, a Transfer of Equity (sometimes called a property transfer) is the legal process of changing the ownership of your home by adding or removing a person to or from the title deeds.
As the legal owner of your home, you can add someone to the ownership deeds by transferring all, or a share of the equity, to them, or you can remove someone. This can be done for several different reasons including if you’ve had a change in circumstances, you want to gift a share of the property equity to a family member, or you want to reduce your inheritance tax liabilities.
What is home equity?
Your home is likely to be one of, if not the biggest asset you own, and having home equity is the legal term for whatever percentage of the property is yours. This amount will differ depending on several factors such as who else owns the property with you and whether any mortgage is in place.
It’s worth noting that while your mortgage provider won’t actually own any part of the property – it’s still legally yours – the property itself is used as equity against your mortgage loan. Whatever the reason for your equity transfer, your mortgage provider needs to be told of any changes.
When do you need to do a transfer of equity?
There are different reasons why you might want to transfer equity to another person. But to complete the transfer of equity process properly, it must leave a minimum of one, or a maximum of four, legal owners.
For example, you might want to transfer equity from joint ownership to a single owner or the other way round to shared ownership between two people, or remove a named spouse or partner before adding a new one. Here’s a detailed breakdown of some of the more common instances when a transfer of equity may be needed:
Divorce or separation
If you and your partner jointly own the property, a decision needs to be made about what happens to it. This usually means either staying as joint owners then selling the property, or one person being removed so full ownership moves to the other person who wants to stay. The second option is common when any relationship involves children.
A new relationship
When you already own property either as the sole owner or as the result of a previous relationship, you might start a new relationship or even get married. A transfer of equity can then be done to add your new partner or legal spouse to the title deeds of your home, moving the property from single to joint ownership.
Removing joint ownership
When someone buys property, to help them get on the ladder in the first place, ownership of the property might be split between friends or family, making the process easier financially. This is common practice whether the other owners live there or not. But it’s usual that, somewhere along the line, a transfer of equity will be needed for one owner to buy out some or all of the others.
A transfer of equity can have tax implications depending on your reasons for doing it. For example, it can reduce your liability of inheritance tax if you’re gifting a share of your home to one or more of your children. But on the other hand, it may make you subject to paying more in Capital Gains Tax and/or Stamp Duty Land Tax.
As specialist transfer of equity solicitors, we can advise you more fully to make sure you make the right decision and pay only what is necessary.
Transfer of Equity: A step by step process
While MJR Solicitors will make the transfer of equity process as smooth and straightforward as possible for you. But every transfer is different and, according to your personal circumstances, there may well be more than one solicitor involved.
Following your instruction for MJR Solicitors to act on your behalf, we’ll apply to HM Land Registry for a copy of your property’s title deeds in preparation for your transfer of equity. The basic guide below should give you a good overview of the transfer process that follows and what happens on a typical residential property transfer of equity.
Title deeds review
Once we receive the deeds from HM Land Registry, we’ll review and check the deeds to make sure everything’s in order. If any restrictions are in place that might affect the transfer, we’ll make sure these are complied with.
Transfer documents preparation
Once the title deeds are checked and approved, we’ll prepare the transfer documents and notify everyone involved in readiness for signing.
We’ll also contact any third parties involved, such as banks, building societies, or other mortgage providers. They must give their consent in writing before the transfer can go ahead.
Once the deeds have been received, they’ll be signed and witnessed by the relevant people in the presence of their own solicitors.
Preparation for completion
After the signed deeds are returned, we’ll continue the process and advise and agree with you on a potential completion date.
HM Land Registry notification
The final stage is for us to register the new deeds with HM Land Registry on your behalf. This is subject to a fee that’s based on the value of the property at the time.
How long does a transfer of equity take?
People usually want any transfer of equity completed as fast as possible, but every transfer is different and comes with its own set of circumstances. The time it takes can vary from case to case, but the process can take anywhere up to 6 weeks.
Disputes, signatures from other parties, written consent from money lenders, or even the workload of other solicitors involved, can all add to the time it takes to complete. As always, we’ll make sure we do everything we can to make the transfer as quick and easy as possible for you.
What are the transfer of equity costs?
Again, every transfer is different and costs will vary accordingly. However, MJR Solicitors offer a range of transparent, low-rate, and fixed fees. These include all costs for everything you need to see the process through in full, from start to finish, so you know exactly how much you’ll need to pay. Our current costs are freely available on our transfer of equity fees page.
Transfer of equity Stamp Duty Land Tax
One thing we have no control over are any Stamp Duty Land Tax (SDLT) costs that may be due, but we’ll look into this for you during our initial checks. If you are liable, these will be based on what’s known as a ‘chargeable consideration’ and will depend on your relationship status. As a guide, SDLT is NOT payable on a transfer of equity, if:
– the property is mortgage-free
– the property is mortgage-free and the transfer of equity is a gift
– the property is part of a divorce
– the property is left to you in a will
Does an existing mortgage affect a transfer of equity?
Before any mortgage is taken out, the provider will carry out a series of credit and suitability checks for those applying for it. Because a transfer of equity signifies a change in ownership, the provider will need to carry out the same checks on any new owner.
A transfer of equity can still happen if a mortgage is already in place, but it can complicate matters. A remortgage may be needed, or, if a joint owner is being removed from the title deeds, they’ll need to follow the terms and conditions of the provider to be released from the mortgage.
Can I do the conveyancing for a transfer of equity myself?
The simple answer is, yes. However, we always urge caution on doing this as things aren’t always as clear cut or straightforward as they seem and can get complicated.
There is no ‘standard’ transfer of equity. Often there are formal checks, searches, and financial and legal aspects to consider which will affect the process. If a mortgage is involved, the provider will usually insist on going through a solicitor anyway. Plus, if something does go wrong, it’s unlikely you’ll have the right insurance to cover you.
Contact MJR Solicitors today
While a transfer of equity is a common process carried out by people every day, it has the potential to be complicated and complex. As specialist transfer of equity solicitors, we can complete the entire process for you, explaining every aspect as clearly as possible so you know exactly what’s going on.
Our expert advice is available to you at any time and you’re free to ask us anything whenever you want. So if you’re looking for a transfer of equity for your home and you need our advice or our conveyancing services to complete the process for you, we’ll be happy to help.
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