Transfer of equity on mortgaged property

mistersneezy

My husband and I have 2 rental properties that are in my sole name. As I pay 40% tax and he pays 20%, it makes sense to do a transfer of equity so they are in joint names and then our tax liability on the profits is split equally 50/50. We have made enquiries and the legal fees for this are around £250 per property.
There is a mortgage on each property in my sole name that we need to add his name to. The mortgage providers have both said that we need to redeem this mortgage and take out a new mortgage. i.e. remortgage. At a cost of around £1000 each.
I have also been advised that this is not necessary and that as we are not borrowing any more money or changing the terms a remortgage is not necessary and that we could amend the existing mortgage with them and sign some sort of covenant. Is this correct? Is this normal? I’m going to call them to ask why a remortgage is necessary and why they can’t change the existing mortgage.
This seems like any unnecessary and expensive process which is just a money-spinner for the lenders by arranging new mortgages and charging fees. Does anybody know if there is any way around this or any other way to achieve our goal?

Thrugelmir

For the simple reason that your husband is an unknown quantity. The lender will wish to go through due process, i.e. credit checks etc in order to grant the new mortgage. Legal contracts cannot simply be changed at a whim.

MLSY

hi mistersneezy
who is the lender that is charging a £1000 to add a name ??
are you swapping products as well ??
regards Ian

mistersneezy

Hi MLSY
Bank of Ireland has quoted £900. This sum is made up of search fees, arrangement fees, and solicitor’s fees. However, the solicitor’s fees account for over £500 of this figure and have a note next to them which states it is only an estimate and could be more. That is why we are anticipating it being more. With regard to swapping products - we are keeping exactly the same product with the same loan and the same term but it is having to be rearranged from new. The lenders are insisting that the existing mortgage be redeemed and paid off by a new loan from a newly arranged mortgage, but a conveyancer has told us that this in unnecessary and that once his name is added to the property deeds (transfer of equity) there just needs to be a covenant entered into the transfer deed.

mistersneezy

Thrugelmir wrote: »

For the simple reason that your husband is an unknown quantity. The lender will wish to go through due process, i.e. credit checks etc in order to grant the new mortgage. Legal contracts cannot simply be changed at a whim.

“Legal contracts cannot simply be changed at a whim” - couldn’t agree with you more and yes my husband is an unknown quantity but I think you’re missing the point. The mortgage is already in place, has been for years and has never been defaulted on. The term or the loan are not going to be altered. It was granted on my salary alone and is even less of a risk to a lender with his additional income taken into account. We are perfectly happy to pay solicitors fees for the legal work (I have been quoted less than £250) and am perfectly happy to pay the lender to do credit checks etc. What I am opposed to is paying for a whole new mortgage to be arranged which is completely unnecessary. A conveyancer has advised me that once his name is added to the property deeds (transfer of equity) there is no need for the existing mortgage to be rearranged, just a covenant entered into the transfer deed. The lenders are insisting that the existing mortgage be redeemed and paid off by a new loan from a newly arranged mortgage - something I believe is just to allow them to charge arrangement fees.

amnblog

It does not really matter what a third party is telling you.


BOI will charge what they want to charge and arrange matters how they want to arrange them.


You can ask them again if they are sure you need to incur nearly £1,000 in costs but they control the game.

kingstreet

Compare what BoI is charging against what it would cost to remortgage elsewhere while carrying out the ToE.

Thrugelmir

mistersneezy wrote: »

but I think you’re missing the point.

Not at all. I'm a lender running a business. Therefore I set the overall policy on which I conduct trade. My policies are set for clearly defined reasons. The reasoning behind customers will be totally ignorant of. I won't change a board level set policy just because a single existing customer isn't personally happy. My attitude is tough. Do it my way or go elsewhere.

MLSY

hi mistersneezy
the lender lends the money and has there rules how they lend it, the conveyancer is in theory correct but BOI as each lender does has there own rules for how they conduct their business.
"Transfer of Equity: Adding someone to a mortgage or removing them from it. This is subject to underwriting approval and we will then action the change as a 'rearrangement'. This means that the existing mortgage is cancelled and a new mortgage put in place."
most lenders would charge some fee for the alteration and you would have solicitors costs as well
depending on the interest rate you currently pay on the mortgages is it worth shopping for a new lender ?

Let_Us_See

Being a cynic, perhaps you could confirm whether or not you currently have a low interest rate with BOI?

mistersneezy

amnblog wrote: »

It does not really matter what a third party is telling you.


BOI will charge what they want to charge and arrange matters how they want to arrange them.


You can ask them again if they are sure you need to incur nearly £1,000 in costs but they control the game.

[FONT=&quot]Just done that. Been on the phone this afternoon and asked why we couldn’t just have [/FONT]a covenant entered into the transfer deed which would be a fraction of the cost and would not involve a new mortgage being arranged. They said they were “unable” to do it that way. I think they meant “unwilling”.