• Transferring Property Into Joint Names & Remortgaging - What About Stamp Duty?

    By Guest on 12th May 2016

    I have two BTL properties solely in my name, and I wish to transfer(gift) them into joint ownership with my wife. We are also planning on re-mortgaging both to raise funds for a new house.

    I understand that a property without any mortgage can be transferred into joint names without any stamp duty to pay.

    But my mortgage broker advises that I should not completely pay the mortgages off, as it will make the mortgage application process longer & more complex due to properties then being unencumbered.

    So my plan is as follows:
    - Pay off mortgage 1 down to a small balance (say £10K)
    - Do the equity transfer into joint names
    - Remortgage in joint names
    - Use these released funds to pay off mortgage 2 down to small £10K balance again, and again transfer ownership and then remortgage.

    The second remortgage funds are needed to buy our new main home.

    Is this is a legal / legitimate approach? How is the stamp duty calculated in this case? Can it all be done as part of normal conveyancing process, without any major delays?

  • 1 Answers

    By Guest on 31/05/2016

    Hi,

    Nothing illegal about what you propose and it would be a legitimate way of avoiding stamp duty on the two transfers of equity however:

    1. Whilst there is mortgage outstanding on the mortgages, even if it's only a small balance, you will need the lender's consent to the transfer. They may or may not consent

    2. Lenders will generally want borrowers to have owned the property they intend to mortgage for at least six months so you may find you have to wait 6 months after each transfer of equity to remortgage (i.e. until your wife has been an owner for 6 months). This can be avoided if you remortgage and transfer simultaneously (it might not be a problem anyway because you will have the properties for more than 6 months)

    Note that unless you are selling your current main home before or simultaneously with your new purchase you will have to pay higher rate stamp duty, i.e. 3% more than you would have paid if you did not own any other property

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