What is equity?
Equity is the legal term for how much money you have in your property. This is calculated by taking the property’s value and subtracting the balance of your mortgage. To put things in perspective, once you’ve paid off your mortgage, you’ll have 100% equity in your home.
How does the transfer of equity work?
When equity gets transferred, there is usually a change in property ownership. There is no sale, and at least one of the original owners will stay the same. People transfer equity when there is a change in family circumstances, like a marriage or a divorce. The owner with the property in their sole name wants to add or remove another person from the title deed.
As long as there is no current mortgage on a property, a transfer is relatively straightforward. The property solicitors at Robertsons can help you submit all relevant paperwork to the HM Land Registry.
It is possible to transfer equity with a mortgage on a property, but it adds a few steps to the transaction. It is advisable always to seek legal advice when a transfer is considered.