How to Take a Name off a Mortgage

There are typically two situations where you're looking to take a name off a mortgage; either you're: removing yourself or removing a co-owner from the mortgage.

This could be due to a divorce, separation, or a change in financial circumstances. Here are your options if you fall into one of the categories above:

• Your mortgage lender consents to move forward with the existing terms, taking your name or another co-owner's name off the mortgage. This will effectively be a remortgage, but you'll be sticking with the same lender and the same terms.
• The party staying on the mortgage applies for a remortgage with a new lender in their sole name, with the leaving party's name removed.
• Both parties remain on the existing mortgage terms until one of them can pass mortgage affordability checks. This might be suitable for someone looking to move forward with a guarantor or joint borrower sole proprietor mortgage.
• Both parties on the mortgage agree to sell the property and go their separate ways, potentially buying a more affordable property each, or moving into the rental market.

How to remove a name from a mortgage

Removing a name from a mortgage is a common step for UK homeowners, particularly in situations like divorce, separation, or the death of a joint owner.

This involves transferring ownership of the property to the remaining owner(s) or someone else joining the title.

Removing your name from a mortgage can offer several benefits:

• By removing your name, you'll no longer be responsible for the mortgage debt. This can provide financial relief and peace of mind.
• If you're struggling with debt or have a poor credit score, removing yourself from a mortgage can help improve your financial situation and, consequently, your credit score.
• Removing your name can help you move forward with your financial goals, whether it's buying a new property or investing in other ventures.

Why would you need to remove someone from a mortgage?

Common reasons for removing a name from a mortgage in the UK include:

• When couples separate, it's often necessary to divide assets, including property ownership.
• If you're facing financial difficulties, such as job loss or illness, removing your name from a mortgage can reduce your monthly outgoings and alleviate financial stress.
• In the unfortunate event of a joint owner's death, the remaining owner(s) may need to transfer ownership to consolidate the property.

Removing your name could reduce your monthly mortgage payments, improve your credit score, and potentially free up your finances for other investments or savings. However, you must know that you'll be signing away your equity within the property to do this. Equity in a property is the difference between the current market value and the outstanding mortgage balance.

How do I get my name off a mortgage with my ex?

Going through a divorce or separation can be a challenging time; dealing with property ownership and mortgage responsibilities can add to the stress. If you're wondering how to remove your name from a jointly held mortgage, here are some key considerations:

• If you can't agree with your ex-partner on how to divide assets like property, consider involving a mediator to help you reach a mutually agreeable solution.
• Instruct a solicitor to legally represent you in the Transfer of Equity process, potentially help negotiate a fair settlement, and look out for your best interests.
• If one owner wants to keep the property, they will take over the mortgage and buy out the other party's share (after calculating and agreeing upon a valuation). They might not be able to afford the monthly payments alone, so it will likely involve a remortgage or getting some help from a friend or family member.
• Make sure you keep track of all your legal documents and correspondence to avoid any delays or misunderstandings throughout the process.

Before removing your name from a mortgage, consider the following:

Financial implications of removing a name from a mortgage

• Capital Gains Tax (CGT): If you're selling or gifting your share of the property, you may be liable for CGT. This tax is applied to the profit made on the sale or consideration paid in a gift. The specific rates and exemptions can vary, so it's essential to consult with a tax advisor or your conveyancer.
• Stamp Duty Land Tax (SDLT): Depending on the circumstances of the transfer or gift, you may need to pay SDLT. This tax is typically payable when property or land is purchased or transferred. The amount of SDLT depends on the property's value.
• Reduced Equity: By removing your name from the mortgage, you'll lose your share of the property's equity. This means that you'll no longer have a financial stake in the property and won't benefit from any future increases in its value.

Legal implications of removing a name from a mortgage

• If you're going through a divorce or separation, it's important to consult with a family law solicitor to ensure a fair division of assets.
• If you're gifting your share to another individual, there may be inheritance tax implications, particularly if the property's value exceeds certain thresholds.
• While removing your name from a mortgage may initially impact your credit score, it can be beneficial in the long run if you're facing financial difficulties. By reducing your monthly outgoings, you can improve your overall financial situation and potentially boost your credit score in the future.

The process of taking a name off a mortgage

The process of removing a name from a mortgage, or transferring equity, typically involves the following steps:

• 1Agreement Between Parties: The first step is to reach an agreement with the remaining owner(s) on the terms of the transfer, including the division of equity and any financial settlements.

• 2Mortgage Lender Approval: You'll need to obtain approval from your mortgage lender to remove a name from the mortgage. The lender will assess the remaining owner's ability to meet the mortgage repayments.

• 3Legal Advice: Instruct a conveyancer or solicitor to legally represent you in the Transfer of Equity process and to ensure that it's carried out correctly.

• 4Valuation: The property will need to be revalued to determine its current market value. This valuation is essential for determining the amount of equity to be transferred and calculating any tax.

• 5Transfer of Equity: Once the lender's approval is obtained, a transfer of equity deed will be prepared by your solicitor. This legal document transfers ownership of the property to the remaining owner(s).

• 6Land Registry Update: The Land Registry must be updated to reflect the change in ownership. This involves submitting the necessary paperwork (TR1 form) to the Land Registry.

• 7Mortgage Re-arrangement: The remaining owner(s) may need to re-mortgage the property in their sole name to secure a new mortgage agreement. This involves a new application and credit check.

It's important to note that the specific steps and timelines may vary depending on individual circumstances and the complexity of the case.

How much does it cost to take someone off a mortgage?

SAM's fixed fees start at:

• £413 INC VAT for a Transfer of Equity with a remortgage.
• £399 INC VAT for a Transfer of Equity without a remortgage.
• £413 INC VAT for a Transfer of Equity with a Help to Buy property.
• £413 INC VAT for a Transfer of Equity when staircasing.
• £360 INC VAT for a Transfer of Equity for party/ies being added where there's zero consideration (money changing hands).
• £299 INC VAT for a Transfer of Equity for a deceased joint proprietor.

The cost of removing a name from a mortgage can vary depending on several factors, including:

• Legal Fees: You'll need to pay legal fees to cover the services of a conveyancer or solicitor.
• Stamp Duty Land Tax (SDLT): Depending on the circumstances of the transfer, you may need to pay SDLT.
• Mortgage Re-arrangement Fees: If the remaining owner(s) need to re-mortgage the property, there may be additional fees associated with this process such as early exit fees.

By working with SAM Conveyancing, you can benefit from our competitive fees and transparent pricing structure.