Transfer of Equity
28/07/2021
57,217
14 min read
Transferring the equity in your property (ToE) differs to a sale and purchase as in most cases one of the existing legal owners of the property will remain on the title and a party is either being added or removed. The timescales are quicker than when you first purchased the property although it can slow down if you can't get mortgage lender consent to the transfer or if a party being removed fails to get their ID1 Form verified. Whilst you can complete the process yourself, you will need a transfer of title solicitor, for some parts of the transaction.
In this article we'll explain the equity transfer conveyancing process, the costs involved and how to overcome problems along the way.
Transfer of Equity Solicitor
We can handle the whole process in a matter of weeks with our panel of excellent-rated solicitors. We can help with:
- ToE advice
- Transfer a party on or off the legal title
- Separation Agreements
- Gifted transfer for no consideration
Fixed Fee | Rated Excellent on Trustpilot | Completions in weeks not months | On all Mortgage Lender Panels
Summary of the Transfer of Equity Process
- 1
(if applicable) Get remortgage mortgage offer or mortgage lender consent
- 2
(if party being removed) Get an ID1 Form verified
- 3
(if leasehold) Confirm freeholder notice and settle any ground rent or service charges due
- 4
Completion takes place and (if applicable) money is transferred to buy the equity
- 5
Post completion work including filing SDLT form and registration at the Land Registry
Transfer of Equity Costs
- Solicitors fees including ID checks, office copies
- Land Registration fees
- (if party being removed) ID1 Form verification fee
- (if mortgage) Change of mortgage fee
- (if leasehold) Notice fee to freeholder
On average a quote will cost in the region of £450 to £1,000 depending on which equity solicitors you choose to instruct, if the property is leasehold and if there is a mortgage.
Do I need a statutory declaration of solvency for my transfer?
Where a transfer is completed under market value then the mortgage lender or solicitor may require the party gifting their equity to make a Statutory Declaration of Solvency to an independent solicitor.
To be able to declare you are solvent, your assets (assets meaning valuable things you own like money in the bank, car, jewellery or houses) must outweigh your liabilities (HMRC taxes, loans, mortgages, contracts with suppliers). If you were made bankrupt within 5 years of gifting your equity then the transaction could be reversed in order for the property to be sold to pay off the creditors.
Here are some useful articles on this:
We have solicitors who can help provide legal advice on this so call us to get a quote on 0207 112 5388
Transferring equity with an existing mortgage
If you have an existing mortgage registered over the legal title then you have 2 options available to you:
- Obtain mortgage lender consent
- Get a new mortgage
If you can't get mortgage lender consent and the party/ies are unable to afford the mortgage in just the new owner's names then you cannot complete the transfer.
4 Stages of the transfer of equity remortgage process
- 1
Instruct a Solicitor
The parties remaining on the legal title instruct a solicitor to act on their behalf.
For the party leaving the property, they will need to complete an ID1 form and have this witnessed. The witnesses can only be a solicitor, licensed conveyancer, notary public, barrister, CILEx Conveyancing Practitioner, Chartered Legal Executive Conveyancing Practitioner, Chartered Legal Executive, lawyer outside the UK, officer of the UK armed forces operating overseas or an employee at a Land Registry Office.
If you are paying consideration to the leaving owner, then your solicitor will need to confirm the source of the funds you are using (read this article on How to prove source of funds).
- 2
Mortgage consent or mortgage offer
As highlighted above, if you are paying off a mortgage, getting lender consent should be the first thing you do during the process. Without the consent from your mortgage lender your solicitor will not be able to progress your transaction.
If you are getting a new mortgage then your mortgage lender issues their mortgage offer to your solicitor. Different mortgage lenders will have different requirements for their solicitor to adhere to. Whereas some won't ask the solicitor to do anything more than their obligations under the CML, some mortgage lenders request additional information to be provided to them before they will agree for the mortgage to be issued. For example, Paragon Mortgages require the solicitor to provide copies of planning permission, building regulations and rights of way, however Santander Plc doesn't require this.
If there is an existing charge registered on the property, then the solicitor requests for the mortgage lender to provide a current mortgage statement in order to discharge the balance on completion. If there is a mortgage they will then send off the certificate of title to the mortgage lender requesting the release of the mortgage funds in time for completion.
- 3
Completion and payment of Transfer of Equity Costs
The solicitor sends you a financial statement before completion detailing the legal fees and disbursements. This is an example of a costs statement for a transfer with an existing mortgage of £200,000 and £50,000 consideration:
Cost | Description |
£250,000 | Mortgage advance from new lender |
Less: | |
£200,000 | Existing mortgage |
£50,000 | Payment for equity to leaving party |
£TBC | SDLT payable at current rate |
£599 | Solicitor Fee INC VAT and disbursements (this varies depending on the property value, if the property is leasehold and if there is a remortgage |
£40 | Land Registry |
£639* | Balance to complete excluding SDLT * Leasehold financial statements would need to include a notice fee payable to the freeholder to confirm change of ownership and any new mortgage. |
Once your mortgage advance is received by your solicitor and you and your solicitor are ready to complete, then your solicitor will redeem your existing mortgage, pay the consideration due to the leaving owner, settle their invoice and any disbursements (online ID check, official copy costs and OS1/bankruptcy). The balance, if any, is then repaid to you. The only amounts left will relate to the Land Registry fees and any costs due to the property being a leasehold.
- 4
Post completion
The process for discharging the old mortgage and registering the new mortgage/owners at the Land Registry can take between 1 to 6 months after completion. The time delay is linked to the Land Registry having a backlog of work. This can be extended further for leasehold properties if the freeholder/managing agent delays in releasing the notice. Delays can be worsened if your service charge and/or ground rent are in arrears so make sure that you have settled these prior to remortgaging otherwise you may have a stand-off, with your freeholder not releasing your notice until your service charge account is settled (read more about What happens after completion).
Do I need a statutory declaration of solvency transfer of equity?
Where a transfer is completed under market value then the mortgage lender or solicitor may require the party gifting their equity to make a Statutory Declaration of Solvency to an independent solicitor.
To be able to declare you are solvent, your assets (assets meaning valuable things you own like money in the bank, car, jewellery or houses) must outweigh your liabilities (HMRC taxes, loans, mortgages, contracts with suppliers). If you were made bankrupt within 5 years of gifting your equity then the transaction could be reversed in order for the property to be sold to pay off the creditors.
Here are some useful articles on this:
We have solicitors who can help provide legal advice on this so call us to get a quote on 0207 112 5388
Transfer of equity with existing mortgage
If you have an existing mortgage registered over the legal title then you have 2 options available to you:
- Obtain mortgage lender consent
- Get a new mortgage
If you can't get mortgage lender consent and the party/ies are unable to afford the mortgage in just the new owner's names then you cannot complete the transfer.
4 Stages of the transfer of equity and remortgage process
- 1
Instruct a Solicitor
The parties remaining on the legal title instruct a solicitor to act on their behalf.
For the party leaving the property, they will need to complete an ID1 form and have this witnessed. The witnesses can only be a solicitor, licensed conveyancer, notary public, barrister, CILEx Conveyancing Practitioner, Chartered Legal Executive Conveyancing Practitioner, Chartered Legal Executive, lawyer outside the UK, officer of the UK armed forces operating overseas or an employee at a Land Registry Office.
If you are paying consideration to the leaving owner, then your solicitor will need to confirm the source of the funds you are using (read this article on How to prove source of funds).
- 2
Mortgage consent or mortgage offer
As highlighted above, getting the consent from your lender for a transfer of equity with existing mortgage if you are paying off a mortgage should be the first thing you do during the process. Without the consent from your mortgage lender your solicitor will not be able to progress your transaction.
If you are getting a new mortgage then your mortgage lender issues their mortgage offer to your solicitor. Different mortgage lenders will have different requirements for their solicitor to adhere to. Whereas some won't ask the solicitor to do anything more than their obligations under the CML, some mortgage lenders request additional information to be provided to them before they will agree for the mortgage to be issued. For example, Paragon Mortgages require the solicitor to provide copies of planning permission, building regulations and rights of way, however Santander Plc doesn't require this.
If there is an existing charge registered on the property, then the solicitor requests for the mortgage lender to provide a current mortgage statement in order to discharge the balance on completion. If there is a mortgage they will then send off the certificate of title to the mortgage lender requesting the release of the mortgage funds in time for completion.
- 3
Completion and payment of Transfer of Equity Costs
The solicitor sends you a financial statement before completion detailing the legal fees and disbursements. This is an example of a costs statement for a transfer with an existing mortgage of £200,000 and £50,000 consideration:
Cost | Description |
£250,000 | Mortgage advance from new lender |
Less: | |
£200,000 | Existing mortgage |
£50,000 | Payment for equity to leaving party |
£TBC | SDLT payable at current rate |
£599 | Solicitor Fee INC VAT and disbursements (this varies depending on the property value, if the property is leasehold and if there is a remortgage |
£40 | Land Registry |
£639* | Balance to complete excluding SDLT * Leasehold financial statements would need to include a notice fee payable to the freeholder to confirm change of ownership and any new mortgage. |
Once your mortgage advance is received by your solicitor and you and your solicitor are ready to complete, then your solicitor will redeem your existing mortgage, pay the consideration due to the leaving owner, settle their invoice and any disbursements (online ID check, official copy costs and OS1/bankruptcy). The balance, if any, is then repaid to you. The only amounts left will relate to the Land Registry fees and any costs due to the property being a leasehold.
- 4
Post completion
The process for discharging the old mortgage and registering the new mortgage/owners at the Land Registry can take between 1 to 6 months after completion. The time delay is linked to the Land Registry having a backlog of work. This can be extended further for leasehold properties if the freeholder/managing agent delays in releasing the notice. Delays can be worsened if your service charge and/or ground rent are in arrears so make sure that you have settled these prior to remortgaging otherwise you may have a stand-off, with your freeholder not releasing your notice until your service charge account is settled (read more about What happens after completion).
Frequently Asked Questions
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