We’d like to ask about the costs associated in transferring the title of our family home from joint names to one? Do we have to tell our lender and does it mean we have to refinance, thank you?
Your lender will need to be notified as they hold the title. As for refinancing your loan; the lender will need to do a variation to the contract which may result an a new loan assessment being undertaken.
If you have had your loan for a while; you might want to use this time to look at your options and see if there is a cheaper rate for you.
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If I am reading between the lines of your question, I gather that the requirement to change the title from two names to one, might be in regard to a separation?
In that case, if you obtain a family law court order to change the title to one name, you can avoid having to pay stamp duty on the transfer.
If you are changing the title for some other reason, the proportionate (50%) stamp duty will be payable.
A solicitor can guide you through this.
In respect to the loan, as Sam has correctly pointed out, your current lender will have to give consent to the transfer of title into one name. They would do this if the remaining party is able to demonstrate sufficient income to service the loan.
If you are going through this process, it might be beneficial to speak to a professional finance broker to ascertain if you can find a more appropriate loan for your situation (with possibly a lower interest rate).
Best of luck.
Sam and Steve have covered this one reasonably well for you as they raise some valid points. If i may add a few other things
To address your question about fees it will be subject to the reason behind it - I have listed a few things that COULD be involved.
Stamp duty. Changing property ownership will incur stamp duty, which will be calculated based on the valuation of the land. Usually it is between 3 - 5.5 per cent. In some states like Victoria, stamp duty can be waived.
Capital gains tax (CGT). Selling or transferring ownership may incur a CGT. If the sale involves an investment property, then the seller will need to pay CGT. As a general rule, it is 25% of the capital gain.
Fees. When you sell or transfer the title of a property, you change the conditions of the mortgage, which may incur break fees. If you require a lawyer, there may also be legal fees and valuation fees.
So hopefully we have addressed your questions about fees?
Lets move onto a few other areas that do raise their head when transfer of title takes place.
There are a few steps involved in changing the ownership details of a property and depending on the type of property ownership, how you are changing it and whether it is under a mortgage. Below are some of the key steps you could come across.
1. Check the mortgage. If the property still has a home loan attached to it you will need to have the details of this on hand as they may also need to be adjusted depending on your reason for making a change to the property ownership.
2. Get a copy of the property title. You can contact your local state office that looks after land titles for a copy of the properties title as a reference for changing the details.
3. Fill out a property title transfer form. You can get this from your government agency that looks after land titles for the form/s required to change the property ownership. You can also ask them for instructions on how to properly fill this out.
4. Submit the title transfer form. Once you have completed the form with all relevant details you will need to submit it to your local state government land office that looks after property titles.
5. Pay the relevant fee. Any change of title or adjustment to property ownership will incur a fee to be paid to the relevant state government office. (as indicated above)
6. Wait for the processing of the form. The relevant agency will then process the form and if all is well will make the relevant adjustments to the ownership details held by the state.
If you have a mortgage still attached to the property you will need to notify your bank of the change to property ownership and they may ask you to alter your loan documents to match the property title details.
There are anti-tax avoidance rules that state you must have a valid reason for transferring the title of a property apart from tax benefits. Be sure you know your reason and be certain to document it.
Ingrid, I hope that has provided some further information that will enable you to develop an informed view of what to do.
It could be worth speaking to a solicitor or conveyancer first before your deliberately move forward with intent. Of course, if your bank is looking to restructure the loan with one name only on it - defiantly look around at what is available & ensure you are maximising your return on this change.
Thank you once again
0481 383 490
I don’t know the answer to whether you would incur stamp duty or not but you would definitely have to tell your lender and definitely have to refinance.
From a borrowing point of view, this may cost up to $1000 when you factor in discharge fees and registration of mortgage etc.
I would suggest you get an answer on the stamp duty and any accounting implications first and then see a broker to be sure that the refinance can be achieved ALL before you start any transfer.
Best of luck