Transfer of Equity - Lender says yes, solictor says no.

Xanthippus

Hello everyone,

1st post on this site, so be gentle!

My partner (we are unmarried) has been living with me for the last few years. She gained permission to let when she moved out of her property (purchased on a residential mortgage).

Now, having had various discussions and, more importantly, each having received independent legal advice, we have agreed that I will invest in her property and benefit from the rental income too. Currently, we are waiting for the initial period of the mortgage to expire to avoid early repayment surcharges (2 years time), so I'll pay the remaining mortgage payments for now + overpay by 10% until I can pay it off entirely (penalty free).

Anyhow, to claim the income from the property I need to be named on the title deed. The mortgage lender (HSBC) has said they would accept my name being adding to the title deed via a Transfer of Equity, whilst keeping the mortgage in her sole name.

Great, exactly what we were hoping for. But the solicitor we went to use has said the Transfer of Equity would be impossible under these conditions. If the mortgage lender themselves aren't objecting, I'm can't really understand why we can't proceed.

I'm going to ask more questions of course, but thought I'd arm myself with the combined experience and knowledge of the internet / MoneySavingExperts after having read various conflicting accounts in my google searches up to this point.

So, if the lender agrees with our plans, why couldn't we perform a Transfer of Equity?

Thrugelmir

Who did you speak to at HSBC?

Xanthippus

My partner spoke with a member of the central office HSBC mortgage team (on two separate occasions). On the first call they confirmed it would be ok, so we subsequently approached a solicitor to make it happen, but the solicitor then said the transfer could not be performed if I wasn't named on the mortgage.

My partner phoned HSBC to go back through the idea once more and they reconfirmed they would not object. But our solicitor still seems to think it doesn't really matter what HSBC say.

Thrugelmir

One thought if you are not named on the mortgage then you cannot claim relief for the mortgage interest against your share of the rental income. .

Xanthippus

Good point Thrugel. However, ultimately (if it does go through), one of the key advantages is that my partner is taxed at 40% on her rental income, where as my income would fall within the 20% bracket.

jennifernil

Our daughter is in the process of adding her partner (soon to be husband) to the title of her house.

Her mortgage is with HSBC and she has been told by them that they are fine with this, no need for him to be on the mortgage.

Solicitor has also spoken with them and been told it will be OK, so now in process of getting that in writing.

Will be interesting to see what happens next.

Solicitor has no problem with doing the paperwork (Scotland).

Xanthippus

Hi Jennifer,

Glad to hear it hasn't proved a problem in your daughter's / future son in law's case. Gives me hope that I'll be able to iron out this niggle after all.

kingstreet

Solicitors hate HSBC's charge documentation for a situation where there are more owners than borrowers.

You might have to find another solicitor who actually wants the business. Expect to pay more though, I'm told it's very onerous.

Xanthippus

Hi King, interesting, thank you. I've just received another reply from my solicitor, looks like they are starting to admit we can do it. I'm not sure if it is just because they haven't dealt with HSBC on an issue like this before, or they simply wished to avoid doing it.

"The problem is that the land registry won’t register the transfer into your joint names unless your lender consents to the transfer in the actual transfer document. To do this you would need to be added to the mortgage. If you could ask HSBC if they would join in the transfer document to formally give their consent we could see if the land registry would register that."

minimike2

Did you use an HSBC panel solicitor or source your own?

If the latter, you may be better off asking HSBC to appoint one from their panel who are familiar with the scenario. To be fair to your current solicitors it isn't exactly a straightforward common scenario.

HSBC used to have an approved panel - I am not sure if they still operate that but could be worth asking your mortgage advisor there.

You may also wish to speak with an accountant or tax specialist regarding the tax situation as they will be best place to advise you on that.

Xanthippus

Hi Mini, it was a solicitor we sourced ourselves. We hadn't thought to ask HSBC, but it makes perfect sense now that you say that. Great tip, will certainly investigate the idea, thank you.

P.s. We both currently employ an accountant to help with our tax returns, and again you are right, their feedback has been very useful.