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How Does Transfer of Equity Work?

It can already be a stressful time when it comes to moving house, on top of that mortgage/property jargon can be a bit of a handful too. In the process of changing house there’s a process called ‘Transfer of Equity’, and this will be the process you reach down the line when you’re now looking to move over the ownership of your property. If you’re struggling to understand this concept, we’ve looked to make the process simple for you as we take you through a guide below of the in’s and out’s in Transfer of Equity.

First of all, what exactly is Transfer of Equity?

Transfer of Equity is the process to change the ownership of your property making sure that at least one of the original owners remains on the property ownership. For example, it could be a case that a married couple who originally bought the property have now divorced so either the husband or wife remove them self from the deed. Alternatively, a couple have recently married so there’s a request to now change it so there’s a co-ownership of the property. It’s also worth bearing in mind the actual equity that’s looking to be transferred when the process takes place.

For example, If a property was bought for £200,000 and £50,000 was put towards the property directly, this would be classed as the equity you owe of the property with the remaining difference taken out through a mortgage to cover the cost.

If you were then to get married and are looking to co-own the property with your new partner, only half of the equity would be transferred rather than the value of the house. In this case it would be £25,000 transferred to the spouse.

How does the process work?

For this part, lawyers will be required to sort out the legal matters as this process would not be straight forward. To begin the process you’d first need an official document which outlines the title of the property. Conveyancing solicitors will be required to review this and then do the following on your behalf:

  • Look at the existing documents and understand who owns the property at the moment through possession of the deed
  • Make sure the identification of the parties are official
  • Prepare the Transfer of Equity deed
  • Arrange for all the parties involved to sign the ‘TofE’ document
  • Calculate whether stamp duty is payable to Inland Revenue
  • Register for the transfer to take place
  • Arrange for relevant parties to sign the deed and apply the necessary changes

Once all this has taken place the transfer would have been complete. However, there are some cases in which the process could be a bit more complicated and require further steps. This is the basic process when buying a new property. If there are complications before deciding who will take control of the property, it would be better to decide this before contacting transfer of equity solicitors to deal with the remainder of the process.

 

 

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