Transferring ownership of a property may be required due to a divorce or a property sale etc. However, having a mortgage can make this a little tricky, though it is still possible.
You should allow the process to take slightly longer and there are also a few factors that you will need to consider.
First and foremost, you must determine whether you want to add someone else to the ownership of the property but keep the original name on the title of the deeds, or whether you want to transfer the whole ownership to someone else.
The aforementioned tends to be the most straightforward option as the lender will typically assess your combined income to decide whether or not you are eligible.
If the latter applies to you, both parties should be prepared to undergo more extensive eligibility checks.
Now you may be curious as to what an eligibility check involves. Essentially, an eligibility check is carried out by a lender to see whether or not the individual in question meets their requirements and can carry on with the existing mortgage.
Depending on the circumstances i.e whether you are looking to add someone to the ownership or transfer it to a new owner you will need to pass the following criteria.
First and foremost, the parties involved must be able to pass a credit check. They must also have enough income to be able to afford the existing mortgage. Moreover, they must also be of the appropriate age to be able to accept ownership.
There may be instances where these criteria are not met and as a result, the new or joint owners are not deemed eligible for the current mortgage.
Now, there are ways of overcoming this issue. The party in question will either have to find a way of paying off the remainder of the mortgage or they will have to find a way of remortgaging the property.
In the worst case, it may not be possible to transfer the property entirely into their ownership.
There may be instances where the ownership of a property is shared between a couple of people which then become known as tenants in common.
As there are a few people involved things can become a little complicated. If the owner that remains is not paying any money to those who are leaving, they will most likely have to sign a policy which is known as a ‘Statutory Declaration as to Equitable Title’.
Whilst this states that they are the sole recipients of the property’s equity, it also states that they are entirely responsible for paying off the rest of the mortgage.
As mentioned, failing to pass the eligibility checks will make it difficult for you to transfer the ownership of the property, however, there are a few other restrictions to make yourself aware of. They include the following:
The first restriction affects buy to let properties, especially in cases where the new owner is likely to be living inside the property.
Secondly, if the person who is going to be removed from the mortgage is still living in the property you will struggle when trying to transfer the mortgage to someone else.
Finally, the third restriction concerns the number of borrowers. If you intend to have 3 or more borrowers on the market, you will likely experience issues.
There are a few steps involved in a successful transfer of ownership. Once the lender approves the transfer, the next steps will follow.
The first step involves contacting your solicitor. They will then either prepare a transfer deed or a new mortgage deed depending on whether or not there is a mortgage that still needs to be paid off.
You or your solicitor will then need to alert the HM Land Registry of the transfer. In most cases, it is likely that your solicitor will do this for you.
They will then register the change of ownership and add the new name to the property title deeds. If necessary, they will also remove the existing name from the document.
If you have an apartment or a property that is a leasehold, you will need to remember to get in touch with the landlord to inform them of the transfer. After doing so, you will then be required to pay them notice fees.
In some instances, a stamp duty may need to be paid. This can differ depending on the circumstances.
Check with your solicitor to see whether you are liable for paying the stamp duty. Sometimes the stamp duty will not need to be paid if you are transferring the ownership as a result of divorce.
A transferable mortgage refers to a loan that can be transferred between borrowers permitting that certain requirements are met.
A transferable mortgage allows the current borrower to transfer the mortgage to another person who is then responsible for paying the rest of the mortgage.
They will do so at the same interest rate as what the original borrower was paying. Essentially, a transferable mortgage makes it easier for the current borrower to transfer the mortgage to another person.
These types of mortgages are not hugely popular and certain eligibility requirements still apply.
Whilst it is possible to transfer ownership of a property with a mortgage, there are several factors that you will need to make yourself aware of. It is important to remember that the rules can differ depending on the lender so you will need to consult with them to see what issues may affect you during the process.
Furthermore, you must also make sure that you utilize the help of a reliable and trustworthy solicitor who will be able to aid you during the process of transferring the ownership of your property.