What is a transfer of equity?

There are many ways of changing the legal ownership of your property without putting it up for sale in the market. You may want to add the name of your partner as a joint owner after getting married. You may want to give your children stakes in your property. You may want to completely transfer the ownership of your property without selling it off.
Whatever the case is, you will need to go through the process of transfer of equity if you are willing to change the legal ownership of your property. Before understanding the transfer of equity, let us briefly understand what equity means.
What does equity mean?
Equity is a legal term used for explaining the extent of a property you own in monetary terms. In other words, your equity is the value of your property after deducting any outstanding mortgage (if any). For example, if the value of your property is £300,000 and you are yet to pay £160,000 on your mortgage, your equity in this case would be £140,000.
What is a transfer of equity?
As the name suggests, transfer of equity is the process of changing the legal ownership of your property by adding or removing the name(s) of people from its title. It is a common misconception that transfer of equity involves monetary transfers.
Although the name may seem deceptive, it is important to note that the transfer of equity does not always involve any transfer of money.
The most common cases where a transfer of equity takes place are the ones where a couple gets married or divorced. In the former case, the owner of a property intends to add the name of the partner as a legal owner. In the latter, one of the owners intends to remove their partner as a legal owner of the property. The transfer can be seen as an individual either buying out their share in the property or selling their share to let the other person have complete legal ownership.
If there is any change in the legal ownership of a property where at least one of the original owners keeps the title, a transfer of equity is necessary. Whenever there is a situation where one of the parties decides to leave, the remaining individual(s) will need to buy them out. This often involves the transfer of equity with mortgage as the concerned property is remortgaged with the new owner(s) in the equation.

Transfer of equity as a gift
Especially in the cases of parents adding the names of their kids as legal owners of their property, transfer of equity takes place in the form of a gift given by the current owner of the property. Here, there is no transfer of money, and the beneficiary is not required to pay or invest as the transfer of equity takes place.

How to go about a transfer of equity?
In most cases, the transfer of equity is a much simpler and more straightforward process as compared to the sale or purchase of a property. However, it requires a good amount of legal work and it is advisable to work with a skilled conveyancer to help you throughout the process.
Moreover, if you have an ongoing mortgage on your property, it is advisable to work with an experienced broker in your town as you transfer your equity. For instance, if you want to transfer the equity you hold in a property located in London, get in touch with the best mortgage broker London has to offer before you go ahead with the process.
The most important aspect of the transfer of equity is the completion of the land registry TR1 form. This is the form that outlines the current owner(s) of the property, the person(s) the equity is transferred to, and the person(s) transferring their equity. Moreover, you will need original copies of the title of your property with you along with the contractual details about ongoing mortgages (if any).
In the case of transfer of equity with mortgage, the owner of the property will require consent from their mortgage lender to go ahead with the transfer. If you are willing to add a new member(s) as a legal owner(s) of your property, they would be equally liable for paying off the mortgage and the lender would need to make their own checks to make sure the new names are suitable to be added as owners.
If you need to remove one or more people from the title deeds, they need to be absolved of all their mortgage obligations before the transfer takes place. In such cases, the mortgage lender will make checks to ensure that the remaining party/parties are capable of repaying the remaining mortgage on the property.
If you are systematic in your approach and take help from suitable professionals, the process of transferring equity will not seem complicated and tedious.