How Do I Take over a Family Member’s Mortgage?

If you want to take over ownership of a property along with taking over a mortgage from a family member, there are a number of steps that you will need to go through.

Technically, instead of a mortgage transfer, you will be taking out your own mortgage while theirs is redeemed, although the effect will be as if you had taken over the debt yourself.

It is important to understand the implications of transferring property and taking out a mortgage, so whether you are taking on the property or transferring it to someone else, you should seek independent legal advice.

If you are the person who will be taking out a mortgage, then your lender will also require you to be legally represented. If you will be remortgaging, then they will also need your solicitor to represent them in the transaction, ensuring the property has a good and marketable title and that it is a sound investment.

When might you need a mortgage transfer?

When circumstances change over time, you may want to alter the ownership of a property and the mortgage over it. For example, you could take over the family home from your parents or be added to the ownership and mortgage of your new partner’s home.

As relationships change, you might want to take over sole ownership and sole control of a mortgage of what was previously a shared home. Or you might want to transfer a property into joint names and include a new partner on your own mortgage.

Whatever you want to do, you are always recommended to speak to a solicitor to ensure that your rights and interests are protected and that the correct legal process is followed.

Transfer property to a family member along with the mortgage

If you wish to take over a mortgage, then the legal process will be similar to buying a home. You will not simply be able to ask the lender to transfer the mortgage to your name; you will need to make your own mortgage application from scratch.

You may wish to shop around to find the best possible deal rather than simply staying with the same lender and taking up a similar deal to the one your family member has.

You will need to go through the lender’s application process, supplying identity and income information so that they can assess your eligibility.

You will also need to ask a solicitor to represent both you and the lender. If you are moving to a new lender, then the solicitor will need to investigate the legal title of the property and carry out searches to ensure that the property is a sound investment.

A transfer document will be prepared, transferring the property into your name. The other person should take independent legal advice before signing to ensure that they understand the implications of the transfer.

On the day of completion, the solicitor will arrange for the previous mortgage to be repaid, and the transfer document will be dated. They will then ask the Land Registry to change the Land Register to remove the previous mortgage, change the name of the owner and add the new mortgage.

Remove someone from a mortgage – joint to sole names

Where a mortgage is in joint names, and you want to remove someone, you will need to approach the mortgage lender to ask for their consent. They will want to make sure that you are able to manage the loan on your own before releasing the other person from their obligations.

Again, a solicitor will need to be involved in dealing with the legal transfer of the property into your sole name.

Add someone to a mortgage – sole to joint names

If you would like to own your property jointly with someone else and they want to take on the mortgage with you, they will need to go through the lender’s standard approval process. Their credit history and income, and expenditure will be checked to ensure that they are acceptable.

If the lender is prepared to include them, then they may be prepared to simply add the other person to your existing mortgage. Alternatively, you can consider taking out a different mortgage if you find a better deal.

Where the new joint owner is being added to the existing mortgage, then a new mortgage deed will be sent to your solicitor to be signed. Your solicitor will also prepare a transfer document to transfer the property from your sole name into joint names.

If you will be remortgaging, then the new mortgage offer and mortgage deed will be sent to your solicitor, and you and the new owner will both need to sign.

Once the documentation has been signed, your solicitor will arrange for registration of the changes at the Land Registry.

Stamp Duty Land Tax

In some cases, Stamp Duty may be payable if you are added to a mortgage. The transaction is effectively a transfer of property to you, and where the value of the transfer is above the Stamp Duty threshold of £125,000, tax will be payable.

The property and mortgage transfer process

You will need to ask a solicitor to represent you in the mortgage transfer transaction, as this will be a requirement of the lender. You should also take independent legal advice when taking on a mortgage or transferring your legal interest in property to ensure that you are fully aware of the implications.

At the time you take over a mortgage, you can choose to remortgage, moving to a different lender if you wish. Whether you stay with the existing lender or choose a new one, you will need to go through their approval process as they will wish to satisfy themselves that you are able to afford repayments and likely to keep these up.

You should also ask a solicitor to start work on the transfer and mortgage process. They will need to obtain your title deeds and, if you will be moving to a new lender, carry out searches, so this process can begin at the same time as you are applying for the mortgage if you wish. This will mean that your solicitor is more likely to be ready to complete once the mortgage offer is issued.

If the property is leasehold, you will usually need to notify the freeholder or their agent of the transfer. They may require you to enter into a deed of covenant confirming that you will abide by the terms of the lease.

Joint ownership explained

If someone is being added to a mortgage so that the property and the mortgage will be held jointly, you will need to decide which type of joint ownership you would like. There are two different types, as follows:

Joint tenants

If a property is owned as joint tenants, you both effectively own the whole property together. Should one of you die, the other automatically is the owner of the property. This means that you do not have a specified share in the property, and you cannot leave the property to anyone in your Will.

Tenants in common

If you own a property with someone as tenants in common, you will each own a specified share of the property. You can decide to own half each, but you could also hold it in different shares, such as a quarter for one person and three-quarters for the other. Should you die, your share of the property will pass under the terms of your Will or, if you do not have a Will, in accordance with the Rules of Intestacy. This means that the other joint owner will not necessarily inherit your share of the property.

Choosing the right type of joint ownership

It is important to choose the right type of joint ownership if you will be taking on a mortgage and property with someone else. If you will each be contributing different amounts to the purchase and mortgage, ownership as tenants in common might be the best option. This will allow you to hold unequal shares in the property that reflect your contributions.

Ownership as tenants in common is also useful in other circumstances, such as where you wish to leave your share of your property to someone other than the joint owner. This is often used by couples who have children from a previous relationship who would like to leave their share of the property to those children. You can arrange for the other joint owner to have a life interest in the property so that they can stay there as long as they wish, but ultimately your share could pass to your children.

Your solicitor will be able to discuss your situation with you and make sure that you are happy with the type of joint ownership you have selected.

For more information, see our Conveyancing Services page.

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