Transfer of Equity

A transfer of equity is when a party is either added to a mortgage or removed from it. There are many scenarios where this may occur, but perhaps the most common and familiar involves marriage or divorce.

In the case of marriage, one partner might own a property and have a mortgage on it. When they marry, they wish to add their new husband or wife to the mortgage. This would be a transfer of equity from the original owner to their new partner.

In the case of divorce, the property would be jointly owned by the couple seeking a divorce. A transfer of equity would see ownership of the property transferred to one half of the couple. The person retaining the property ownership would typically buy out the other person’s part of the home.

The process is easier to complete if there is no loan taken out on the property. If no mortgage exists, there is no question of whether the person remaining in the property can afford to meet the mortgage payments each month. Problems can occur that make the situation more complex if affordability comes into it.

Similarly, a transfer of equity can be done with anyone you wish. If you own your property at present and wish to add a sibling or child as a co-owner, certain taxes such as Capital Gains Tax could come into play. It is always important to seek professional advice from a solicitor with experience in the transfer of equity process, so you can see where you stand before you begin.