As with many financial matters, making changes to your existing mortgage can be complicated and difficult to understand. Here, we share how to add or remove people from your mortgage so you know the steps involved.
How to add someone to your mortgage
If you’ve been living with a partner, you can add them to your mortgage as long as you both agree. As with applying for a mortgage, they will have their credit history checked and income looked into to ensure that they’re not a risk to the lender, and you will need a solicitor to arrange the legal requirements associated with this transfer of equity. Firstly, you should speak to your existing lender to see if they will add your partner to your mortgage. They’re under no obligation to do so and, if they are happy to, this may incur a fee. If they are not willing to make the change you will need to look into remortgaging the property in both of your names. This may work in your favour if you’re able to secure a better deal than your current rate, but you may also be subjected to early repayment charges.
There are a few additional things to consider when adding your partner to your mortgage. For example, there may be stamp duty and further tax implications to pay if they already own a property. Plus, you’ll need to agree on what will happen to the property should one of you die. If you decide to be joint tenants, you will own the property equally and it will simply be passed to the other owner in the event of death. If you’re tenants in common, you’ll each own a percentage which can then be passed down to the deceased’s children.
How to remove someone from your mortgage
There are several reasons that you might want to remove someone from your mortgage. For example, you may have bought a property with a partner that you’re now separated from or a friend that now wants to buy their own place. The easiest way to settle these situations would be to sell the property and split the money between you, but if this isn’t an option that can be agreed on you can go down the route of removing someone. This is fairly common when there are children involved and one parent would like to stay in the family home.
The good news is that removing someone from a mortgage is possible, as long as everyone included in the mortgage agrees to transfer the equity. The change will need to be registered with the Land Registry (which incurs a fee determined by the value of your property) and you will also need to discuss this with your mortgage lender. Should your lender not agree to remove someone from your mortgage, you will need to remortgage which could demand an early repayment charge. However, it may be that you can find a mortgage provider with a better rate so switching might work out well for you after all.
If one of you is going to be buying the other one out of the property, this means that one of you will be paying the other’s share of the equity. In this case, the one keeping the property will need to be able to afford whatever the cost of their equity is plus be able to take on the mortgage that was previously paid for by two people. The legal side of removing someone from a mortgage is all dealt with by a solicitor who will arrange everything for the transfer deed, and this will incur additional costs too.
When looking to add or remove someone from your mortgage, using a mortgage advisor can help to relieve some of the stress involved. Not only will they be able to talk you through everything that you need to do, but they’ll be able to find you the perfect option should you need to remortgage. At Choice Mortgage Solutions, our team of experts will assist you and give you the confidence that you’re making the right decision for you. Contact us today!