Re-mortgage or Transfer of Equity

Re-mortgage

The process involves:

  • Investigating your Title to ensure the new lender’s security is fully enforceable. This involves making appropriate searches at the Land Registry and local authority and sometimes with other authorities depending on the location of the property (e.g. coal mining searches) and also checking the title deeds in the same way as when purchasing the property.
  • Obtaining a redemption statement for the old mortgage and re-paying it.
  • Requesting the new mortgage funds from your new lender.
  • Registering the new mortgage at the Land Registry and discharging or cancelling the old one.
  • In the case of leasehold properties (e.g. flats), giving notice to the freeholder and management company of the new mortgage.

Normally it should be possible to complete the re-mortgage comfortably within three weeks of the offer being made by the lender.

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Transfer of Equity

This is the term used to describe the transfer of a share in the property; for example, when a sole owner transfers ownership into two names or when joint owners transfer ownership to just one of them.

The process involves:

  • Investigating the Title to ensure the existing owner has a good Title to the property.
  • Submitting a return to HMRC in respect of Stamp Duty Land Tax. Usually this will be unnecessary unless the party acquiring a share is making a payment in excess of £40,000.
  • Registering the change of ownership at the Land Registry.

If the property is to be transferred subject to an existing mortgage, the owners (old and new) must make a joint application to the lender. This is known as a ‘Transfer of Equity Application’. The outgoing owner is sometimes released from his mortgage obligations in return for the new owner agreeing to be bound by them.

Sometimes a transfer of equity is coupled with a re-mortgage; this has the effect of automatically releasing the outgoing owner from the old mortgage when it is discharged.

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