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Can you transfer ownership of a house with a mortgage

October 11, 2020
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Adding another person to a mortgage while you are still making payments is possible, but not always simple. The most common reason you would add another person to an existing mortgage would be to add a spouse to your mortgage agreement. You might also want to give your home as a gift to your adult children by adding them to the mortgage.

You could either achieve this by remortgaging your property or by asking your mortgage provider to add the other person to the mortgage. In this guide, we will look at how this is achieved and what you will need to know before moving forward.

If you’re nearing the end of the repayment

If you are almost finished with your mortgage payments, it would be easier to wait until you own the house in full to pass ownership of it to another person. Once you own the house, you can simply “gift” the entire property or a percentage of the equity to your partner or another person. You would have to choose the legal structure of this joint ownership, which means choosing between joint tenants or tenants in common.

As joint tenants, if one of you passes away, their shares of the property are passed to the surviving owner. As tenants in common, you can decide who will inherit your shares in the property.

Transferring ownership by remortgaging

By remortgaging your property, you could apply for a joint mortgage and this would allow you to transfer ownership of the property to your spouse. Remortgaging a property can make sense if you have reached the end of a fixed-term arrangement. Remember that you will need to pay an arrangement fee and your partner will need to meet the lending requirements. You could also use this opportunity to release some equity from your home.

Transferring ownership by adding someone else to the mortgage

Another common way to add another person to your mortgage is to approach your current lender. They are under no obligation to allow you to add another person to the mortgage, but they may allow this. This will also charge an arrangement fee, so this should also be taken into consideration. The lender will also carry out affordability checks on the new applicant.

What if the person has poor credit?

Poor credit doesn’t rule you out for securing a mortgage, but it does make it more difficult. You cannot simply transfer a mortgage to anyone you want, the lender has to agree to it. And this cannot happen without identity, anti-laundering and affordability checks.

If your partner has poor credit from a previous marriage, this might make it more difficult to secure a mortgage. Working with a mortgage broker with experience in this area will help you to navigate the lenders and find the best deal for your needs.

Lenders don’t automatically rule out applications from those with poor credit, but they will need some reassurance that your money problems aren’t going to impact your ability to pay a mortgage. Taking steps to improve your credit score by always paying bills on time, keeping within your credit limit and avoiding credit applications will do help to convince the lender that you are a responsible borrower.

How can a broker help?

A broker will offer expert insight into the whole mortgage market. They will be able to advise you on the best course of action and how to increase your chances of being accepted. In the case of transferring ownership, they will also be able to advise on the cheapest way to do this without incurring too many unnecessary fees.

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