Transfer of Equity

Posted on 1 February 2011 by Ian Wagg


How does a transfer of equity work?  My house is in my sole name and I would like to sell half of the house to my partner so it can be in joint names. The mortgage is worth £80,000. Can I do this and receive £40,000 from my partner for the sale?  We need the money as we want to get a buy to let mortgage and need it for the deposit.

Ian,

A transfer of equity is a relatively simple process and will involve your mortgage Lender and Solicitor.

You will need to approach your Lender first to gain their consent and this will usually involve completing an application form, a new personal questionnaire for each of you and more than likely the payment of an administration fee. They will then carry out credit checks on your partner and assess their suitability for a mortgage. Where you are adding a borrower rather than replacing or removing someone this is normally a bit of a paper exercise.

At more or less the same time you will need to instruct your Solicitor to act on your behalf in the transfer, they will normally act on behalf of your Lender too. You and your partner will have to agree on what you deem to be an acceptable consideration for 'buying' some of the property from you and your Solicitor may be able to help you with this. It may be an idea for your partner to take separate legal advice to make sure their interests are taken into account. It is also not necessary for the ownership of the property to be 50/50 and if you buy as Tenants in Common then you can agree any split in the property ownership, for example 65/35.

It is not uncommon for people to borrow additional money from their Lender to facilitate the transfer and what you then do with these funds is up to you. However, it will leave you with a mortgage of £120,0000 using the figures you suggest.

Peter

Answers provided in response to Ask the experts are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.

We recommend you seek professional advice with regard to any of these topics where appropriate.

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