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Mortgages, Remortgages and Transfers of Equity

Mortgages and Re-mortgages

Where you are obtaining a mortgage as part of a purchase transaction or redeeming a mortgage as part of a sale transaction, then we will deal with this as part of the rest of the transaction.

Where you are taking out a mortgage on a property that has not previously been mortgaged, we will need to carry out very similar tasks to those involved in a purchase as the provider of the new mortgage will want to be sure that they are obtaining a good title to the property that secures their loan. This will include:

  • Reviewing your mortgage offer;
  • Carrying out searches on the property;
  • Checking the deeds and documents to make sure that you have legal title to the property;
  • Complete the mortgage provider’s certificate of title;
  • Receive funds from the mortgage provider; and
  • Arranging to transfer the funds to you.

Where you are carrying out a remortgage (sometimes called refinancing) – that is to say, paying off one mortgage with proceeds from another replacement mortgage, then things become slightly more complex. There are various reasons as to why you may need to switch mortgages including to obtain a more favourable interest rate from a different lender, to extend the term of your mortgage with a different lender or to release some of the equity in your property – for example by using a secured loan to raise money.

If you are simply switching from one type of mortgage to another but remaining with the same lender then this is not a remortgage and it can usually be dealt with by the lender themselves without a solicitor being involved.

The Remortgage Process

The process involved in a remortgage is slightly more straightforward than in a sale or purchase.

However, because a new lender is involved, we will still need to look into the title to your property to make sure the new lender has adequate security on your home.

  • As with other transactions we will need to take your instructions including obtaining details of your present mortgage and who has the documents to your property if they are not with a current lender. We will also require evidence of your identity so that we can comply with the strict money-laundering duties that apply. You will need to tell your existing mortgagee that we are acting in the remortgage so that the documents can be released to us and you will need to provide us with a copy of your house insurance documents.
  • We will find out how much is currently outstanding on your existing mortgage and get details of your new mortgage from the new lender for whom we will usually act.
  • We will undertake various searches and have a look at the deeds to your property to make sure that there are no issues with your property that could affect the interests of the new mortgagee. We may need to ask that you pay for these searches in advance.
  • Once we have received your mortgage offer from the new lender, we will check to make sure that it is satisfactory given your intentions.
  • Once we have checked the title and checked the mortgage, we will ask you to sign the mortgage deed.
  • Once the paperwork has been signed the remortgage can be completed. We will pay off your previous mortgage from the funds received from your new mortgage and forward any balance to you (or request that you pay a balance to us if you are reducing the amount of your mortgage). If there is a sum due from you this must be paid, together with any Land Registry fee, before completion of the remortgage takes place.

Transfer of equity

A transfer of equity occurs where you wish to make changes the way your property is owned without a sale, as such, taking place.

It occurs where the legal ownership of a property changes hands – for example where joint owners transfer the property into the sole name of one or other of them, or where a sole owner adds another owner into the title. Most transfers of equity will be far more straightforward than a sale or purchase. In many cases, for example, searches or enquiries will be much more limited because the parties are likely already to have knowledge of the property. Also, there is rarely a need for a contract.

The main complication tends to be where the property is subject to a mortgage since the consent of the lender will need to be obtained before the transfer can take place.

Why might you need a transfer of equity?

A very common reasons why a transfer of equity may be needed is because the owner of the property has entered into a new relationship or marriage and wishes to put the new partner/spouse onto the deeds of the house they will be living in. Note that if the property is subject to a mortgage then the lender will need to consent to that transfer.

Similarly, there may need to be a transfer of equity where a relationship has broken down and the property is being transferred from joint names into the sole name of one of the parties to the relationship following a separation or divorce. This may be as part of a court order to deal with the distribution of assets on divorce. Once again, the consent of the lender will need to be obtained and the remaining party may need to be able to show that they are able to make the mortgage payments on their own.

Finally, a transfer of equity may be for tax planning purposes. The ownership of a property may need to be transferred into the name of a third party (for example family member) to help reduce tax liabilities or to help ensure that the property remains in the family.

The tax position, especially in relation to the latter reason for transfer, must be taken into account and we will be able to advise you upon this.
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