One of the things that you will cover during your training and go on to encounter during your working life as a mortgage advisor is customers requesting a transfer of equity.
What is this?
In simple terms, a transfer of equity is the scenario in which the ownership of a property changes from a legal point of view. This will often be a joint mortgage transferring into the sole name of one of the current owners, or reassigning a property and mortgage into joint names by adding an additional party.
Whichever way the transfer goes, when a mortgage has been secured against the property, as well as seeking legal advice from a solicitor, the applicant will also need to speak with a mortgage adviser. You will be able to establish if the request falls within the lending criteria, while remaining compliant with Financial Conduct Authority (FCA) regulations.
When can this happen?
There are a number of possible scenarios for equity transfer, such as for tax planning purposes. Some property owners may choose to transfer the title of their property to immediate or extended family members in order to best manage their liabilities.
Newly married or co-habiting couples can also do this. If the property was already owned by one party, they may decide to apply for a transfer to add the other.
Also, when a relationship ends and a joint mortgage is held against the property, generally a request is placed with a lender to take over the mortgage in just one name. Sometimes there is an additional borrowing request, with the funds often required to compensate the party who is being removed. Sadly, an equity transfer following a separation or divorce will be one of the most common types of request that you will face.
The process
The applicant wishing to remain or be placed on the mortgage will first arrange a meeting with a qualified mortgage adviser. During the interview, you will undertake a full assessment of their affordability, ensuring that the parties will be able to maintain the mortgage payments.
If the request is approved, then the applicants would also meet with a solicitor to complete the necessary legal documents to complete the transfer of title and update the land registry. During this time, the lender would issue a new mortgage offer and liaise with the solicitor to transfer the mortgage into a sole or joint format.
