Transfer of equity

Equity is the value of your property less the outstanding sum of your mortgage. For example, if you own a home costing £200,000 and you have a remaining mortgage of £80,000, you have £120,000 equity.

If you got married and want to co-own the property with your new spouse, you can only transfer half of the equity – worth £60,000 in this case – rather than half of the value of the overall property.

To start a Transfer of Equity, you’ll first need an official copy of the title for the property. This will be used to check if there are mortgages on the property or any other restrictions that might be involved. Your conveyancer will then:

• Review the title deeds or property deeds
• Check the identity of the clients
• Prepare the transfer deed.

The next steps depend on whether there are any mortgages on the property.

• If there are no mortgages on the property, the existing and new owners of the property sign the transfer deed in the presence of a witness and the conveyancer registers the transfer deed at the Land Registry. A Stamp Duty Land Tax certificate is needed if the value of the transaction is above £40,000.
• If there’s a mortgage on the property, you’ll also need the consent of the mortgage lender to go ahead with the transfer. This is because if you are adding someone to the title, they’ll become equally liable for the mortgage. You should also be aware that Stamp Duty Land Tax may be charged on the amount of the outstanding mortgage debt.

Equally, if you’re removing someone from the title, they’ll pass their liability on to the remaining owners of the property. The mortgage lender will want to check that remaining owners are able to maintain mortgage payments before agreeing to the transfer.

Your conveyancer will contact the mortgage lender and request written consent to the transfer. The mortgage lender may want to change the terms of the mortgage before consenting. Once written consent is received, the process can continue as above.

If the mortgage lender doesn’t agree to the transfer, you’ll need to repay the mortgage before you can go ahead with the transfer. This can either be with a cash payment or a remortgage with a different lender who agrees to the transfer.

Both parties don't necessarily need a solicitor for transfer of equity, but it’s highly advisable that you do.

It's not necessary for both parties to have a solicitor if money isn't changing hands through the transfer. However, money must be passed through a solicitor if it's to be exchanged in the transfer. This means it's necessary for both parties to have legal representation in a transfer of equity.

Having a transfer of equity solicitor by your side means you can rest assured that they’ll handle issues such as:

• Ensure legal compliance
• Handle any tax implications
• Resolve disputes
• Protect your interests.