How Does The Transfer of Equity Process Work?

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11/05/2021
3,079
3 min read
Transfer of Equity Process from Parachute Law: A man's hand signs a document beside a child's woodblock toy of a house with a red roof.

What is the process for transfer of equity?


    1
    Agree the amount being paid for the beneficial interest being transferred
Decide who is coming on and/or off of the legal title and agree how much will be paid for the transfer. Or, you can transfer equity for no consideration, this is called gifting property.


    2
    Instruct a solicitor
Your conveyancer will check the title deeds for mortgages or other restrictions, review the deeds, check your identity and prepare the transfer deeds.

    3
    If there is a Mortgage
Your conveyancer will contact the mortgage lender to obtain written consent for the transfer. If the equity is being transferred to a new owner, or to an existing owner, the mortgage lender will carry out a means test to ensure that the party(ies) can maintain the mortgage repayments. The Lender may want to change the terms of the contract to proceed with the transfer.
Once consent is received, you will progress to step 3.

If the mortgage lender does not agree, you will have to repay the mortgage to complete the transfer.

You may be able to repay the mortgage with a cash payment, with a gift or loan, or you may have to remortgage. This means a separate lender loans you the full amount to pay off the original mortgage, plus the additional debt of the transferred equity.
Once the mortgage has been finalised, you proceed to step 3.

    4
    If the property is a leasehold
You must obtain the consent of the freeholder, as well as the accounts for service charges and ground rent.

    5
    Sign the Deed
The existing and any new owners sign the transfer deed in the presence of a witness. This document is called a TR1.

    6
    If a party is being removed
If they are giving up all of their legal and beneficial ownership) then they need to complete an ID1 form to get their ID verified by a solicitor.

    7
    Update the Land Registry.
Your conveyancer submits all of your documents to the Land Registry to update the title ownership. They will also file a Stamp Duty Land Tax form if there is any consideration being paid. If the consideration is over the set limit you will have to pay tax on the transaction. Click here for the up to date SDLT limits.

Do you want our help with the Transfer of Equity Process?

We can carry out your transfer of equity online if you are gifting a house for no consideration. If you would like to transfer equity in exchange for payment, we work with another firm who we can recommend for this service.

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