Transferring half of mortgage into spouse’s name

Question

I’ve recently got married and would like half of my mortgage to be transferred into my spouse’s name. Is this a simple transaction?

Answer

Simon Pook, Head of Residential Property replies:

The short answer to this question is ‘it depends’! If you have no mortgage and you will be gifting one half of the house to your husband, then yes it is a fairly straightforward transaction. However, you will need to think carefully about how you will own the house. You can either own it so that on the death of one of you the survivor owns the house outright, or each of you can have distinct shares so that on your death you can leave your share to whoever you wish. This is particularly useful if you have children from a previous relationship that you wish to benefit from your share of ownership. However, if you choose this option it is important that your Wills are up-to-date and they will almost certainly need changing following the transfer of the house.

If you have a mortgage then this makes the transfer a lot more complex. You will need to obtain the lender’s consent to the transfer and they will almost certainly charge for this. You will also need to consider the tax situation. Any transfer of property, except in certain limited circumstances, can lead to a liability for Stamp Duty Land Tax (SDLT). HMRC assume that if you are transferring half of the house to your husband then he would also be taking on one half of the mortgage debt. Therefore if your mortgage has more than £250,000.00 outstanding then you would have to pay SDLT on £125,000.00 at the current rate. If you have a large outstanding mortgage this could lead to a high tax liability even though no money is changing hands for the transfer!

The situation is more complex if either of you own another property, or a share of another property.  If you do, then you will be subject to the additional SDLT premium of 3% of the consideration over £40,000.00. Therefore, if there is a mortgage of £80,000.00 or more on the property, even if no money is changing hands, you will need to pay SDLT at 3%.

If you have a query or would like to book an appointment please get in touch with our First Contact Team on 01256 320555 or email: mail@clarkeandson.co.uk.