Transfer Of Equity Remortgages

One of the more complex types of remortgages is known as a Transfer Of Equity Remortgage, or a TofE, as its known.

Please Note: All information correct at time of publication, but is subject to change

The first thing to note about a TofE is its not exactly a sale, which is to say, one of the original purchasers must remain otherwise it would be a sale if that makes sense.

Types of Transfer Of Equity

Joint to Sole Owner Transfer – This is common in both relationship breakdowns and when two family members, like say two brothers have purchased a property, Or sometimes its can be a situation where a property was left to two family members, and one wishes to buy out the other. How the situation came to be is a fact but the result is the same Joint to sole ownership transfer. The main rules to this are as follows.

Things To Consider

  1. Agree a price – This is essential that the two parties have a complete and absolute agreement on price one will pay to the other for their half of the property. This may involve having to get a couple of estate agents to value the property, it can also help quickly decide if a buyout or sale is needed. Remember the remaining party will have the original mortgage plus half the equity as a new loan amount, and what will the repayments on that loan look like? Is it affordable? Using a mortgage calculator off the internet which are online with most banks can help answer this question. The key point is to agree on a price you’re both happy with. This is not the same as I will buy you out for this much and you better agree or else legal action will begin. The agreement must be mutual and fair.
  2. Can you afford it? – This is where Look 4 Mortgages can help, by helping you obtain both a multi-agency credit report and a decision in principle. Your broker will go over your situation and once he understands your financial and personal circumstances will seek to obtain a decision in principle.
  3. Consider Financial Separation first – Often in relationship breakdowns, there is a need to get out and get away as quickly as possible. One of the best ways to achieve this is to first do the financial separation. This is by far the best method because it requires less of solicitor interference and more control to both parties. Sorting out property, bank accounts, wills, trusts, credit commitments etc. This is a great place to start and can result in a transfer of equity situation and the leaving party buying somewhere new. This is the best option where children are involved. Once completed if divorce is still needed it can be done more easier and with minimal stress on either party. Usually, because they are not under the same roof any longer. In some cases, financial separation and physical separation can lead to reconciled relationships. ‘I love (enter name) but cannot live with them.’ This can lead to your ex-partner becoming your best friend or in some cases more.

Joint to Joint considerations

Everything above can apply to Joint to Joint transfers where one of the original purchasers is remaining on the deeds but removing the other party. For example, removing a family member and adding a partner or spouse. Or removal of wife or husband and adding a new partner. Even removal of one family member and adding of another family member. Whatever the reason the order is the same. Agree on a price you’re both happy with remember agreement must be mutual and fair.

The final point is a transfer of equity can be done quickly or can take a long time depending on how long it takes to get point one done. Often we see people after the price has been agreed then a remortgage for transfer of equity for us is simply a case of. First appointment (fact find) to get a decision in principle, to advise on the deal and once we have submitted the application and documents needed, get the mortgage agreed with the lender, instruct the solicitor to act and chase all until it completes. Sounds easy, well with a broker from Look 4 Mortgages it is and then you can get on with the rest of your life.

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