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Can I transfer my mortgage to my spouse?

October 29, 2020
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When you get married, you may want to transfer ownership of half of your home to your partner. How you achieve this will depend on your ownership status. If you own the home outright, then you can simply give one half of your home to your spouse. This will give them legal rights to the property. But if you still have a mortgage, you will have to get your lender’s permission to add someone new to the mortgage.

Transferring your mortgage to your spouse

The first step in transferring your mortgage to your spouse is to speak to your lender. They might have rules against this, and even if it is allowed, they will almost certainly charge you. You could remortgage the property as a joint mortgage, starting from fresh with a new company. Or you could add your partner to your existing mortgage agreement.

What charges will I face?

You will almost certainly face fees from your lender, usually an arrangement fee. But you could also be liable for Stamp Duty Land Tax. Often shortened to Stamp Duty, this is a tax on property purchases over a certain threshold. 

At the moment, this threshold is £500,000. If you have over this amount left of your mortgage, HMRC will still consider this to be a transaction, which means you will need to comply with the tax requirements. Even though no money is changing hands – only the allocation of debt – the tax will still need to be paid.

Who will own the property?

You will have to decide on the legal structure for the property. You can choose between tenants in common or joint tenants. If one of you were to pass away, the property would be passed to the surviving spouse and they would own it entirely. If you have children from a previous marriage and want to protect a portion of their inheritance, you could also decide where your share of the equity in the home should go in the event of your death.

When you transfer the mortgage, you will have to decide what share of the equity your spouse will get. Will they have half of all equity to that point? Or will they start accruing equity from the moment they are added to the mortgage? If you owned 60% of your home at the time you added your spouse to the mortgage, they could only ever own half of the remaining 40%, or 20%.

Don’t forget the association of credit

When you enter into financial agreements with your spouse, you are creating a financial link between you. If you fall behind on the mortgage payments, this will impact both of your credit scores and your ability to secure lending in the future. The same goes for opening joint bank accounts. Think carefully before you create these financial links, as they are difficult to reverse.

Which is the best option?

If you both have a steady income and good credit scores, you could remortgage the property and apply for a joint mortgage. This could allow you to negotiate better terms and give you the freedom to pay off your mortgage sooner, particularly if you will not have two household incomes.

Remember that your lender is under no obligation to add a second name to the mortgage, particularly if your spouse does not meet their lending criteria. In this situation, remortgaging with a new lender could be a better option. This option may also incur fees. 

If you are approaching the end of your repayment, it might be advisable to repay the mortgage and then give half of the home to your partner.

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