Transfer of Equity Explained

Transfer of Equity will occur once the borrower is free from the mortgage or has been freed from the collateral. So what really is transfer of equity?

Equity transfer will only happen either if the borrower has an added mortgage or has been released from the mortgage.

Common reasons for an equity transfer would include marriage, when partners want to combine their existing individual assets. On the other hand, divorce or separation from a partner is another reason for equity transfer. Both parties that are involved may want to get the properties that they originally own the moment they decide to separate. During tax planning, property owners sometimes transfer their assets to a family member as advised by an accountant.

Equity transfer usually happens when there is a problem between the partners or if there is another party involved with the mortgagor.

Transfer of Equity is usually done by many if there is a short in financial resources. This way the one borrowing the property can transfer the equity to another close relative like a spouse to somewhat like renew the mortgage. Once you have filed an equity transfer, there should be an action plan to resolve the lack of financial resources to avoid any problems and issues with the lending company. The Trustee in the bankruptcy can set aside the equity transfer if there is no action plan to resolve financial problems.

The Lender has the right to agree or decline a request for equity transfer anytime. The deed is bounded to both parties that are involved. Both parties cannot walk away from the contract unless the mortgage has been fully paid including any additional charges.

The lender may see the credit as a potential reason for the borrower not to pay the full mortgage, thus they usually check financial records of the borrower.

Transfer of Equity or remortgaging: which is better?

For marriages that did not work, there is usually a difficulty in the communication of both parties which may lead to unpaid mortgages where the interests may double if unmanaged. Alternative mortgage companies are always there to help you process a legal the equity transfer without any hassle.

Remortgage can be considered if there is an additional rate when you switch or transfer. When the trust between the lender and the borrower has turned cold then remortgage is a better option you can choose.

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