Transferring a mortgage in the UK to another person is possible, but there are several things to consider before doing so, including legal implications and financial obligations.
In some cases, you may need the consent of your existing lender or even the permission of a court before making such a transfer.
Whether you’re looking to share the mortgage with a family member, transfer your mortgage share, or handle the mortgage after a divorce, this article will guide you.
What is a Mortgage Transfer?
A mortgage transfer is a process whereby a homeowner transfers their existing mortgage to someone else.
This means that the new person will take responsibility for the mortgage payments and any associated costs, such as legal fees or stamp duty.
The process of transferring a mortgage can be complex, depending on the specific situation. It’s important to be aware of all the potential implications before embarking on a mortgage transfer.
Can You Transfer a Mortgage to Another Person?
Yes, it is possible to transfer a mortgage from one person to another. However, this process is subject to various rules and regulations, which need to be considered before making any decisions.
Firstly, the person transferring the mortgage must have the permission of their lender, which will carry out its own checks to ensure that they are able to pay back the loan.
In some cases, especially if you’re transferring your mortgage share, you may also need the consent of your existing co-borrower.
Moreover, the person taking on the mortgage must be able to meet the lender’s eligibility criteria, have sufficient income to make payments and agree to take responsibility for any possible future financial issues.
The lender may also require that a third party, such as a solicitor or accountant, verify that the transfer process is legitimate.
What Steps Need to be Taken in Order to Transfer a Mortgage?
The process of transferring a mortgage typically involves the following steps:
- Obtaining permission from your existing lender
- Securing alternative finance, if required
- Ensuring that all legal requirements are met
- Making sure that the new buyer meets all of the lender’s criteria
- Paying any additional costs, such as legal fees and stamp duty
- Completing the transfer and ensuring that all documents are signed
How Can You Transfer a Mortgage To Another Person?
1. Contact Lender
In order to transfer a mortgage, you will need to contact your lender or broker first. They can help you decide whether transferring the mortgage is the best option for you and provide information about any applicable fees and charges.
You should also both agree to the terms of the mortgage transfer. This will include what share of the mortgage each party is responsible for, and any other important details such as how long you have to pay it back and when your repayments are due.
2. Legal Paperwork
Once you have agreed on all of the above details, you can begin the process of transferring the mortgage.
You will need to complete some legal paperwork in order to transfer the mortgage. Your solicitor or conveyancer will help fill out all of the relevant documents, and you should make sure that it is signed by both parties before it is sent off.
3. Finalizing the Transfer
Once all of the paperwork is complete and both parties have signed it, you are almost ready to transfer the mortgage.
Your lender will need to process your application and then they will be able to finalise the transfer. This process usually takes a few weeks.
However, it can take longer if there are any problems with your documentation or any other issues.
Once the transfer is complete, you will receive confirmation from your lender and you can start making payments to them on the newly transferred mortgage.
What Should You Consider Before Transferring a Mortgage?
Before you decide to transfer a mortgage, there are a number of important factors that you should consider.
One should bear in mind that transferring a mortgage can be quite complicated and time-consuming.
Firstly, it is important to assess whether or not transferring the loan is in your best financial interests.
This includes taking into account all of the associated costs, as well as any potential savings that you may receive. It is also worth noting that there may be additional costs involved, such as legal fees and stamp duty.
In addition, you should ensure that you are able to make any additional payments that may be required by the new lender.
You should also check whether any early repayment charges apply to your existing loan, as these may need to be taken into account when transferring a mortgage.
Make sure that both parties are in agreement and fully understand the implications of transferring the mortgage.
This includes discussing any possible consequences with your lender before you agree to proceed with the transfer.
Finally, it is important to remember that transferring a mortgage can have an impact on your credit rating. It is, therefore, recommended that you discuss all of these issues with your lender before making a decision to transfer your mortgage.
How Much Does It Cost to Transfer a Mortgage?
You should make sure that you are aware of any extra fees and charges that may apply before you start the process.
Legal Fees
You will need to pay legal fees to a solicitor or conveyancer who will help you with the transfer process.
Lender’s Fees
Your lender may charge an administration fee for processing the mortgage transfer. Your lender should be able to provide you with a detailed breakdown of any applicable fees when you contact them about transferring the mortgage.
Stamp Duty
You may also have to pay stamp duty if the new owner has never owned a property before. Generally, the amount of stamp duty depends on the value of the property and may range from several hundred pounds to several thousand.
You should take all of these costs into account when you are deciding whether or not to go ahead with the transfer.
What Are the Benefits of Transferring a Mortgage?
Transferring a mortgage can have several benefits. It may allow you to move house more easily, as it allows you to keep your existing mortgage agreement in place.
It also means that you can avoid the costs and time associated with applying for a new mortgage, such as arranging a survey and taking out building insurance.
Transferring a mortgage may be particularly useful if you are looking to help a family member purchase a property.
It could mean that they don’t have to take out a long-term loan, which could be difficult if their current income is uncertain or unstable.
Can You Transfer a Mortgage to a Family Member or Relatives?
You can transfer a mortgage to a family member through a Transfer of Equity. This type of transfer is also known as a ‘gift’.
A Transfer of Equity allows you to give ownership of part or all of your property to a family member, usually without needing approval from the mortgage lender.
The process typically involves transferring legal rights and responsibilities for the mortgage from one party to another. It can be done between spouses, civil partners, family members or a combination of the three.
The main benefits of transferring a mortgage to a family member are that it can make it easier to manage the cost and complexity of managing the property.
Transferring part or all of your mortgage could also be beneficial for tax purposes if you’re planning on selling the property in the future.
Can You Transfer a Mortgage After a Divorce?
After a divorce, transferring the mortgage to one of the parties involved is a common option. This can be done through either a Deed of Release or an Assumption Agreement.
A Deed of Release allows you to release your co-owner from any further liability for the mortgage and associated debt. It also releases them from any further interest in the property.
An Assumption Agreement allows you to transfer the mortgage and associated debt from one party to another. This can be done without needing approval from the mortgage lender.
When transferring a mortgage after a divorce, it’s important to take legal advice and fully understand the implications of your decision before proceeding.
It’s also important to make sure that all parties involved follow the correct procedures and understand exactly where they stand in relation to any outstanding debts.
Alternatives to Mortgage Transfer
If you are looking to help someone purchase a property, there are other options available.
1. Remortgage
Remortgaging involves taking out a new loan to replace your existing mortgage. This could provide you with extra funds that can be used to purchase the property and is generally less complicated than transferring a mortgage.
However, you may incur costs such as an early repayment fee for paying off your current mortgage before it’s due date, or additional fees for setting up a new loan.
2. Adding a Borrower
Adding a borrower to your mortgage is another option. This involves adding the person who will be purchasing the property as a co-borrower, so that they are jointly responsible for the loan along with you.
This can be beneficial if the new borrower has a good credit score and income level, as it could help to reduce the interest rate on your loan. However, the original borrower won’t be able to remove themselves from the loan without paying off the balance.
3. Gift of Equity
A gift of equity is when a homeowner gives a portion of their home’s equity to someone who is purchasing it.
This could involve giving them money which can be used to cover closing costs or even reduce their down payment on the property.
This is a good option if the homeowner doesn’t need to access any of their equity for other purposes and can afford to give away part of it.
4. Selling the Property
Selling the property is another option. This involves selling the property to someone else who will take out their own mortgage for it, and can be a good way to help someone get onto the property ladder.
However, this can be a lengthy process and you may need to pay costs such as capital gains tax if you have made a profit on the sale of your property.
5. Taking Out a New Mortgage
The final option is taking out a new mortgage with someone else as the borrower. This could be beneficial if you are unable to make payments on your current loan, but another person can take it over and make the necessary payments.
All of these options should be carefully considered before deciding which is best for you, as each has its own pros and cons.
It’s important to weigh up all of these factors before making a decision. No matter which option you go with, it’s always best to seek professional advice to ensure you make the most informed decision.
Conclusion
It is possible to transfer a mortgage from one person to another in the UK, but it’s important to make sure that you understand all the risks involved.
Taking a few simple steps can help you make an informed decision and ensure that you don’t end up in financial difficulty down the line.