From time to time, our life circumstances change. When there is a mortgage or a property in the equation, those changes may require us to transfer a mortgage. A mortgage transfer can include adding, removing or replacing one or more of the people named on the mortgage. It can be done during a current mortgage term or by remortgaging.
Mortgage transfers can seem like a complex process, but you can make it simpler by having genuine expertise in your corner. Think Plutus has specialist advisers with experience and knowledge in helping homeowners transfer a mortgage. There are many situations that bring about the need for a transfer, so we will try to cover as many angles as possible on this page. You can contact us at any time if you want to speak about your circumstances.
Please note, the process of transferring a mortgage to a different property is known as mortgage porting. We have a separate page about, porting a mortgage.
What does it mean to transfer a mortgage?
A mortgage transfer is a process by which a person is added, removed or replaced on a mortgage that is already in progress. The actual name for this is ‘transfer of equity’. The most common scenarios where this process is needed include:
- Adding/removing a family member to/from a mortgage
- Adding/removing a partner to/from a mortgage
- Adding a child to a property’s deeds
- Family mortgage transfers
- Couples choosing to have a single mortgage rather than a joint one
Some lenders are more open than others when it comes to a transfer of equity. An adviser can give you the tailored advice you need to get guidance for your specific circumstances.
Important considerations when transferring a mortgage
A mortgage is a significant financial commitment that often spans several decades. This means there are some key points you must think about before committing to a mortgage transfer. Both your lender and broker will check that you are eligible for a transfer. You will need to consider the following points along with any other criteria that your lender posits:
- Affordability – is your income sufficient for the proposed mortgage?
- How much equity do you have in your existing mortgage?
- Credit record
- Details of the property
- Employment status
- Reasons for the mortgage transfer
- Any costs involved
- Will stamp duty apply?
- Early repayment charges
- Independent legal advice for all parties
You will need to consider some other points, not least of which is your personal circumstances. For example, if you have recently become self-employed or will soon be going on maternity leave, some lenders will be more suitable than others. This is why it’s so important to consult an adviser to get a good understanding of your options.
How do I add someone to my mortgage?
The most common reason to transfer a mortgage is to add someone into the deal. This often happens when a couple moves in together and wants to share the financial costs and ownership. In most cases, this process will mean changing a single mortgage into a joint one.
Many lenders will look upon this change favourably, as it can provide more security for them. Nevertheless, they will need to carry out their normal checks to ensure the new homeowner will be able to afford the mortgage. A stamp duty charge may be involved since, technically, the person being added is buying a share of the property. There will also need to be changes made to the property’s deeds when a partner is added to a mortgage.
A transfer can be processed at any time, but there may be early redemption charges involved. If you carry out the transfer during your current mortgage term, this is more likely. In cases such as this, the best advice is to add your partner when the time comes to remortgage. This will avoid the additional expense of early repayment charges and enable you to take out a new joint mortgage together instead of making a transfer of equity.
How can I buy my partner out of a joint mortgage?
If a couple separates and no longer lives together, chances are the person that has moved out will not want to continue paying a mortgage on that property. The options are to sell the property together or for one partner to buy the other’s share. In theory, this will remove that person from both the mortgage and the property’s deeds.
This can be a simple process and is really helped by both partners remaining amicable. It is usually possible to carry out a transfer of equity, but the lender will need to perform checks to ensure the remaining homeowner meets the affordability requirements of the mortgage. Plus, of course, there is the matter of the remaining homeowner needing to buy their former partner’s share. Once one party’s name has been taken off the mortgage, most lenders will insist that person also moves out of the property.
The main consideration when removing a person from a mortgage is affordability, but other criteria will still be checked. Details of employment, credit records and income will also be assessed.
Please note, marriage has no bearing on the removal of partners from a mortgage. Married applicants and cohabiting couples will be considered the same by lenders in these circumstances. As far as the lender is concerned, anyone named on a mortgage is responsible for repaying it – marital status doesn’t come into it.
Is it possible to replace one person on a mortgage with another?
It is certainly possible to replace one person on a mortgage with someone else. It’s a two-step process of removing one person from the mortgage and then adding the new homeowner. A transfer of equity can cover this process.
Again, it can be quite straightforward to do this, particularly if the new homeowner meets the affordability criteria. When a person is removed from a mortgage, it can place additional cost on the remaining homeowner as they have to pay the full share of the repayments. When there is a replacement involved, additional capital comes in to buy the previous owner out and then the repayments continue to be shared.
If you have inherited a property, there may be an existing mortgage that you want to put in your name. Think Plutus can help with this too.
How can I transfer my mortgage to someone else?
If your aim is simply to transfer your mortgage to someone else, it can be done. However, there are some strings attached with this kind of arrangement. This process is known as gifting a property and lenders will usually only allow this once the original mortgage has been cleared. Essentially, you are removing your name from the mortgage by paying it off in full. The recipient of the gift will then take out a new mortgage on the property – some lenders may be open to this arrangement when the time comes to remortgage.
Another scenario is when parents wish to add their child(ren) to their property’s deeds. This can provide long-term financial security for their children. It can be done via a transfer of equity, and many families do it to avoid paying inheritance tax. Think Plutus is not a specialist tax adviser, so we recommend speaking to a tax specialist before committing to making a transfer.
Can I transfer a mortgage with bad credit?
Whether someone is being added to, or removed from, a mortgage, it is standard procedure for lenders to carry out their usual checks. Credit checks are a part of this, and the person the mortgage is being transferred to will be subject to this. Lenders need to know about the financial conduct of the new/existing homeowner, and your credit record says a lot about whether you are low or high risk.
It’s not uncommon for a break-up between a couple to mean one or both partners ends up with credit issues. Many divorces or separations leave partners with defaults, CCJs or a combination of various bad credit issues. Bad credit makes it difficult to transfer a mortgage, but it is still possible if you go about it the right way.
The severity of your credit issues will usually be assessed, along with how recently they occurred. There are many possibilities when it comes to bad credit so there’s no way to provide tailored advice without first getting the details of your circumstances. You can enquire with Think Plutus at any time to find out whether a transfer of equity will be a viable option.
Speak to a mortgage specialist
When you get the right advice and go about things in the right way, it can be fairly straightforward to transfer a mortgage. In cases where people have been turned down, it often comes down to lack of experience and approaching a lender that simply isn’t suitable. Mortgage transfers are something that Think Plutus deals with regularly so you can put your faith in our experience and knowledge.
Every case is unique, and it may be that your reasons for seeking a mortgage transfer are causing you a great deal of stress. We will always handle your case with care and sensitivity, and we’ll give you all the time you need to explain your situation and tell us about what you hope to achieve. Our approach is always personal and professional, finding you the best options no matter the circumstances. Whether you’re adding, removing or replacing a person on your mortgage, Think Plutus, and get in touch today.