Transfer 0f Equity And Remortgage Process 2023
Relationships break down all the time. But when that’s a long-term relationship, there’s far more at stake than who gets what. The person who left the home will have a lot more to do than the person who leaves the property.
Considerations before remortgaging when a transfer of equity needs to be completed
In all property transactions, there are legal fees involved. In many of the mortgage deals and in the case of remortgaging, there are offers where the legal fees are covered by the lender. Therefore, there are no legal fees incurred by you to remortgage your home.
If you intend to wait until your mortgage term is up and then remortgage to take advantage of the free legal fees during the remortgage, it won’t work. Lenders only cover the legal fees associated with a mortgage transfer from one lender to another. Not for a change of ownership which involves altering the names on the property’s Title Deeds. To do that, you’ll need to pay for the legal fees incurred for that service.
You can use the same legal service provider your lender provides for the change, but you will need to pay for the Transfer of Equity, as that’s not going to be covered as a standard fee – simply because it isn’t a standard service. Nor is it standard procedure to add and remove names to Title Deeds when you remortgage. That’s why you’ll have additional fees to pay.
Solicitors tend to specialise in certain fields, so just ringing around all the solicitors in your local area will be a hit-and-miss. Some will not provide the service. The legal service you’ll need is provided by a conveyancing solicitor.
It must be pointed out that we are not legal advisors. This is a collation of general advice relating to the Transfer of Equity. It is not something the legal services from lenders tend to assist with, without additional charge. The information below will explain the reasoning behind that.
Advisory Note: Links to further websites are provided to further your understanding of the Transfer of Equity process. We have no affiliation with the third-party websites referenced nor are any endorsed by 1stUKMortgages.co.uk. Our standard terms and conditions of informational use apply. We only advise this so there’s no confusion about what our field is. We specialise in mortgage products and not legal advice.
Remortgaging with Current Lenders will be Easier for a Transfer of Equity
A Transfer of Equity is easier done when you work with your existing lender. The reason is, they can work with the information they already have from arranging your existing mortgage, although that’s not always the case as they can request a new valuation to be done on your property. Also, if you’re working with an existing lender, they may forego any early repayment fees applicable based on extenuating circumstances.
There will be some checks that need to be completed to ensure you can still afford the mortgage on the property without the income of your ex-partner. This is something you’ll need to discuss with your current lender and not your solicitor, who will probably tell you the same.
When you approach a new lender for a remortgage, they need to start from scratch with you as a sole borrower. While there are two names on the Title Deeds of the property, it’s going to cause issues because both people named in the document need to agree to the remortgage terms.
For simplicity, it’s best to treat the Transfer of Equity and the remortgage process separately.
Use a local solicitor to take care of the Transfer of Equity, then remortgage when it’s only you on the Title Deeds. If your situation is a relationship breakdown, your solicitor will act in your best interest. They’ll only notify your ex-partner about what’s happening and advise him or her to seek their own legal representative. The two solicitors will then work together so you don’t need to deal with your ex-partner. Whether he or she gets legal advice is entirely on him or her.
All they have to do is sign the documents your solicitor sends them and return them. Once your acting solicitor has the signed document returned, expressing permission to remove their name from the Title Deeds, that’s what’s done.
Then you can just approach the remortgaging dilemma for a sole mortgage without involving anyone else. This is, of course, assuming the case is a separation and not a divorce, which is entirely different.
Emsleys Solicitors has some further information relating to the legal process.
The implications of not separating the two
When you remortgage jointly, both parties are involved in the process. If you’re releasing equity from your home while there are two names on the Title Deeds, both parties have rights to the cash equity value released.
There may be situations when the other person in a relationship has run up debts using a joint credit card or other means, for which you intend to put right by using equity release. If that were the case, the Transfer of Equity would definitely need to be completed before releasing any equity to ensure that the entire cash released would be solely yours.
The importance of independent legal advice can’t be stressed enough. The costs will vary depending on your location within the UK. For England, it’s possible just to have a Transfer of Equity done, whereas Scottish Law may require the Transfer of Equity and additional fees payable for a Minute of Agreement – a legal agreement between two parties without the need for formal court action, such as the case with divorce proceedings.
In addition, it should also be considered who gets what amount of the equity. It may be the case that following a relationship breakdown, your ex-partner wants his or her share of the equity they’ve paid towards the homeownership. When both people have been paying towards a mortgage, there may well be a settlement fee involved. This is something that should be discussed carefully with a professional advisor to assess just how much equity you’d be best to release to pay any settlement fees incurred during the Transfer of Equity and any agreements made in the process.
Stamp Duty Land Tax can be payable if the property price is in excess of £125,000. This can be applicable even if no money changes hands.
As an example, if your property is worth £300,000, with an outstanding joint mortgage of £200,000, an even split of that using a joint mortgage between the two parties separating would be £100,000 each. Following a Transfer of Equity, the sole owner of the property and sole mortgage holder would have an increased amount of equity and, thereby may be liable for the SDTL incurred. This is something your solicitor will discuss with you as it will need to be addressed before any remortgage is put in place.
Using a homeowner loan calculator to work out how much equity can be released from a home
You can use the homeowner loans calculator to work out how much money you can borrow and what the monthly payment will be over what term. The term can be matched to the remaining term of your mortgage.
Navigating the complex world of property financing can be daunting for many. The vast array of financial products available to homeowners in the UK can leave one overwhelmed. From equity release schemes to homeowner loans, and from RIO mortgages to retirement interest-only mortgages, understanding each of these financial instruments is paramount to making the right decision. This guide delves deep into these options, offering a comprehensive overview to enlighten UK homeowners.
Equity Release: An Overview
Equity release allows homeowners, typically over the age of 55, to unlock the value tied up in their property without the need to move. It provides an avenue to access a lump sum, a regular income, or both, based on the value of the property.
- Immediate Access to Cash: Great for those who need funds for immediate requirements like home renovation or a dream holiday.
- No Monthly Repayments: Unlike regular loans, there’s no need to make monthly repayments, as the loan is usually repaid when the property is sold.
- Impact on Inheritance: The amount received from the property’s sale will be used to pay off the equity release loan, which might reduce the inheritance.
- Early Repayment Charges: Opting out of an equity release scheme before the agreed-upon term could lead to significant charges.
For younger homeowners interested in understanding how much they might be eligible to release, the Equity Release Calculator UK Under 55 section provides a convenient tool to evaluate potential equity release amounts for those under 55.
Homeowner Loans Explained
Also referred to as secured loans, homeowner loans are borrowed against the value of one’s property. This means that the property acts as collateral against the loan.
- Higher Borrowing Limits: Typically, these loans allow for higher borrowing amounts due to the security provided by the property.
- Competitive Interest Rates: Securing the loan against a property often results in lower interest rates compared to unsecured loans.
- Potential Loss of Property: Failing to repay the loan could lead to the sale of the property by the lender to recover the loan amount.
For those looking for stability in their repayments, the Fixed Interest Rate Loan segment offers insights into fixed-rate homeowner loans, ensuring consistency in monthly outgoings.
RIO Mortgages: A Deep Dive
Retirement Interest Only (RIO) mortgages are a type of mortgage specifically for older homeowners, where only the interest on the loan is paid, and the capital is repaid when the house is sold or if the homeowner moves into long-term care.
- Flexible Repayments: One only needs to pay the monthly interest, ensuring lower monthly outgoings.
- No End Date: The mortgage does not have a fixed end date, providing flexibility for homeowners.
For those who are more advanced in age and are considering their mortgage options, the Over 70 Mortgage section provides insights into mortgages for those over 70. Alternatively, the Mortgage For The Over 70S segment sheds light on mortgages specifically tailored for individuals over 60, demonstrating the range of choices available.
Retirement Interest Only Mortgages: What Are They?
Retirement interest-only mortgages are similar to RIO mortgages but are typically offered to a wider age range of retirees. Here, the capital is paid off either when selling the property, moving into care or upon the homeowner’s passing.
- No Need for Monthly Capital Repayments: This can ease the financial burden on retirees.
- Access to Property Equity: Enables retirees to tap into the value of their home.
When considering the option to remortgage, the Cheap Remortgage Deals 2024 section provides a detailed look into the best mortgage deals available in 2024, ensuring homeowners are equipped with the most up-to-date information.
Choosing the Right Financial Institution
Selecting the right lender is as crucial as understanding the mortgage or loan type that suits one’s needs. Reviews and feedback from previous customers can provide invaluable insights. The United Trust Bank Review offers a perspective on United Trust Bank reviews, ensuring that homeowners are well-informed before making any commitments.