Before you make any alterations to either your repayment mortgage or your equity loan, it is imperative to understand exactly how those changes could affect you financially. So, in addition to seeking out as much information as possible online, it may also be a good idea to consider obtaining independent professional financial advice.
The process of removing, adding or replacing a homeowner is referred to as a transfer of equity. It is possible to complete this process if your property was purchased under the government’s Help to Buy scheme, however you will need to obtain permission from the government in order to do so.
Removing a homeowner
Under the terms of the Help to Buy contract, at least one owner on the original equity loan must remain in place until such time as the equity loan has been fully repaid. Additionally, the owners present on the equity loan should also be present on the repayment mortgage contract.
Owners that remain on the equity contract will be required to provide evidence that they can comfortably afford to make the required repayments. But as it is often only possible to make changes to the named owners on an equity loan a maximum of two times throughout the lifetime of the loan, it is important not to be too hasty when considering making alterations.
Adding a homeowner
If you wish to add an owner to the equity loan contract, they must meet the eligibility criteria for the Help to Buy Equity Loan. This means that they must be a first-time buyer and they should not have owned land or a home at any time, either in the UK or abroad.
This information will be checked in advance before a new equity loan contract is drawn up. If the new owner doesn’t meet all eligibility criteria, the application is likely to be rejected.
Replacing a homeowner
If you would like to replace an owner, one application should be made to both remove an existing owner and add a new owner.
All new owners will be required to provide the following information:
– Contact details
– Proof of address, such as a utility bill or bank statement that is no more than three months old
– Proof of identity, such as a birth certificate, passport or driving license
Existing owners will need to provide:
– Contact details
– Contact details for your solicitor
– A letter or email from the lender of your repayment mortgage expressing permission to complete a transfer of equity
Please note that you will be required to pay an administration fee and you will need to find a conveyancing solicitor to complete the process.