4th April 2020
In recent months we have had a rise in the number of Transfer of Equity (ToE) and Remortgage enquiries. Through this article, we will give you a brief explanation of what these transactions entail and what we as residential conveyancing solicitors can do to help.
A ToE is a process through which a homeowner can add or remove a person to/from the Title of their property. In some instances, the parties in the transaction will need to have separate legal representation. This is where the transaction is described as being “at arm’s length”.
Where there is a mortgage on the property, the lender will have to be informed of the changes being made to the Title. They will then give their authority/consent which will need to be lodged with the application to change the register at Land Registry on completion. If the property is a Leasehold property, the Landlord/Management Company may also have to provide a form of consent to be
submitted at Land Registry. The requirement for this would be ascertained once we have sight of the Title documents.
It should be noted that in the case of a person being added to the Title, there may be an element of stamp duty payable which is calculated using the mortgage amount still owing at the time of the transaction.
Increasingly, homeowners will instruct on a ToE at the same time that they do a Remortgage, but this does not mean that one cannot be done without the other.
A Remortgage is a process through which a homeowner can change their mortgage product to a new deal; this can be done with an existing or new lender. At the end of this process, you will not be moving home and the new mortgage will apply to your existing property. The homeowner will have to instruct conveyancing solicitors to act on both their behalf and that of the lender.
Recently, there has been an influx of Remortgage applications as homeowners take the opportunity to benefit from the low-interest rates currently in place. One of the main reasons that one would have to remortgage their property is to obtain a better deal and ensure that they are in the best financial position by reducing the cost of their home loan. Often, this will be when the initial deal on their mortgage is over and they are being moved onto the Lenders variable rate.
When a client is purchasing a property, we as conveyancing solicitors make a point of highlighting the early exit fees payable on a mortgage and this is something that a homeowner will have to be aware of and be comfortable with paying when they are Remortgaging. The period in which this fee is payable varies from Lender to Lender and sometimes can make up a large part of the funds repayable when redeeming the old mortgage in order to put the new one in place.
If you are happy to wait until the end of the mortgage term to avoid the early exit fees, you can secure a rate to use months later when the fees no longer apply, a lot of lenders allow you to secure a rate with them 3 to 6 months in advance. This would however mean that if there are a better deal two months down the line you may miss out on that as you will have committed yourself to a deal (by paying the initial fees, usually non-refundable) that will be starting at the end of your existing mortgage term. The pros and cons will therefore have to be weighed in that regard.
For more information on all of the above and our fees for acting on the same please do not hesitate in contacting our office.
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