Losing a loved one is always deeply distressing. The adversity of the experience can easily be compounded if they have named you the executor of their will. However, before you can start managing their assets, you will need to establish whether you would need a grant of probate.
What is a grant of probate?
This term – often abbreviated as simply ‘probate’ – refers to a legal document you would show to numerous organisations, such as banks and the Land Registry. It confirms that you are authorised to deal with your recently departed loved one’s estate.
A grant of probate is not always needed where the estate is of low value or comprises of limited assets. It’s also possible that, if the deceased owned their assets jointly with someone else who is still alive, ownership is automatically transferred to this person upon the other’s death. Obtaining legal advice at an early stage in the process is beneficial to assist you in determining whether a grant of probate is required.
How long does a grant of probate take?
On average, it can take a year from a person’s death to complete probate and distribute the estate. If the estate is less complicated, then it may take less time. However, the probate process could still take at least six months. It depends on the value and complexity of the estate.
The process begins by establishing the assets and liabilities of the estate. We then calculate whether Inheritance Tax is payable. Then, you must complete an application to the probate court to appoint an executor or executors of the estate. Before a grant of probate can be issued, any outstanding inheritance tax that’s due from the estate will need to be paid. There will often be exemptions and allowances available. These can reduce the tax payable, or may mean that no Inheritance Tax is due.
Do I need a solicitor for a grant of probate?
You don’t always need the assistance of a solicitor in obtaining a grant of probate. However, the legal and financial stakes can be so high that a solicitor’s assistance is often recommended.
Remember that if any beneficiaries of the Will take issue with how you have administered the estate, they could take legal action against you. You can get valuable peace of mind from a solicitor making sure the probate application process in your case is legally watertight.
For expert advice as to whether a grant of probate is required please contact one of our expert solicitors either based at our offices in Nuneaton or Warwick. Our website includes further guidance on obtaining probate, while we can also advise you over the phone. Please telephone our offices on 024 7638 2343 to make an appointment.
Watching your children grow up isn’t easy and it’s even harder letting go of them. As a parent, you will do anything to ensure your children’s happiness and success. This may even include transferring ownership of property onto your child.
Whether you want to give your child a step up onto the property ladder or help them avoid paying Inheritance Tax, transferring ownership may be a good option for you. While this is not the most sentimental process for passing over your property to the next generation, it will ensure unwanted mistakes are avoided.
Here we will break down the process of transferring ownership to children and address any concerns that may occur during the process.
Do I need a solicitor to transfer ownership of a property?
The process of transferring equity to your child is exactly the same as with a spouse. In order to add your children to the title deeds and transfer them a share of equity, you will need the help of a solicitor.
A conveyancing solicitor can help you with this process. They will be able to advise you on the best options for you and your family. They will also handle the legal work and documentation.
If you have a mortgage on your property, you will need to consult your mortgage lender. This is to ensure that the mortgage will still be paid once your child is added to the deed. The conveyancer is also responsible for logging the changed details of ownership to the land registry. They will also calculate any stamp duty liable to HMRC.
To learn more about the transfer of equity, read our article that breaks down the step by step process.
What is shared ownership?
When transferring equity to your child, you need to decide what type of shared ownership works best for you. Shared ownership allows buyers to purchase a share of a property. It is an excellent option for helping your child get onto the property ladder. Through shared ownership, you can either become joint tenants or tenants in common.
Tenants in common allow owners to have different shares of the property. It is the most common choice for parent-child ownership. When one owner passes on, the property doesn’t automatically go to the other owner. Instead, shares are typically passed on in a will.
For joint tenants, 50% of the property is transferred to the other tenant. This is a more common choice for spouses. Full ownership automatically passes on to the surviving party. Though, it must be noted that you can switch between these two options. You don’t have to settle on one if your circumstances change.
What if my child is under 18?
Though minors are not legally able to hold property in their own name, they have property held in trust until they turn 18.
Trust properties are managed by trustees, an individual or financial institution that manages the property. Trustees must act in accordance with the best interests of the beneficiary and the wishes of the trustor (the entity that opened the trust). Solicitors will take care of setting up the trust deed and manage any legal formalities.
Gifting property is a more tax-efficient way of transferring property to your children. When you gift your property to your child, they may not have to pay Inheritance Tax when you pass away. Inheritance Tax only applies to those whose estate is valued at £325,000 or more and starts at 40% above that figure.
Though, it is worth noting that your children only avoid paying Inheritance Tax completely on a gift if you live for another seven years after gifting the property. If this is not the case, Inheritance Tax will need to be paid by the end of the sixth month after your death. If you die within three to seven years, however, your children will benefit from tax relief. Tax relief, also known as tapered relief, means that the recipients of the gift do not have to pay the full 40%.
Can I gift my house to my child and still live in it?
The short answer is yes. Nonetheless, there are a few things to be aware of. If you transfer ownership but remain living in the property, this is treated as a ‘gift with reservation of benefit.’ In such a case, you reserve the right to live in or out of the property.
Tax rules, however, dictate that even if you live beyond the seven years, the property will remain as part of your estate on your death. This also means that your property will not be exempt from Inheritance Tax.
In order for your property to be exempt from Inheritance Tax, you will need to pay rent to your child. But the rent you pay must be in line with the market rate, the average rate in the area. Also, bear in mind that your child is liable for paying income tax on the rent you pay them.
Is it better to gift or inherit property?
In the transfer of ownership from parent to child, it’s often better to inherit rather than gift property. This is because of the capital gains implications. Capital Gains Tax (CGT) refers to tax paid on the ‘profit’ individuals make on a property. The profit is the difference between the cost basis (purchase price) and the value of the property when gifted.
If you gift your property, your child’s cost basis will be the same as yours- regardless of what the property is currently worth. Let’s say you purchased your home for £150,000. The property is now worth £250,000. Your child’s cost basis will still be £150,000. If your child inherits your tax basis, they will have a capital gain of £100,000. This is the difference between the purchase price and current value.
This adjustment is referred to as a ‘stepped-up basis.’ If your child decides to sell the property after they inherit it, this will help reduce their capital gains tax liability.
Risks of transferring ownership of property
Aside from the capital gains implications, there are other risks to consider before signing over your home.
Once the transfer is complete, you will no longer be the legal owner. This means that you have no rights to the property. This could leave you in a vulnerable position. For instance, in the event of a fallout, your child has the right to evict you. Moreover, if your child decides to sell the property or live there themself, they can force you out despite your wishes.
On the other hand, if your child is going through a divorce from their spouse, the property could become part of a divorce settlement. This means that the property could be sold regardless of your family’s wishes.
If you’re thinking of transferring ownership of property to your child, we can support you every step of the way with our transfer of equity services.
Contact one of our qualified solicitors today to ensure that your assets are managed in the best interests of your family.
No one ties the knot expecting it not to work out. However, the introduction of the no fault divorce law means that couples can now get divorced without needing to allocate blame on the other for the collapse of their marriage.
What happens in a no fault divorce?
Under current legislation, parties can only apply for a divorce if they can provide evidence to the court that their marriage has irretrievably broken down. To evidence this, one spouse has to allege one of the following five facts are relevant ‘fault’ by the other:
Two year separation – if both parties agree
Five years separation – if there is no agreement
However, with a no fault divorce, couples will no longer need to rely on one of the five facts. This means that they can get divorced without having to lay blame. This takes away much of the unnecessary animosity, stress and emotional pain that often comes with divorce – all of which can make an already difficult situation worse. Not to mention, this has the potential to make the process of getting a divorce less costly. With this in mind, it’s fair to say that, for many, the no fault divorce law is a welcomed change.
Plus, the removal of the blame game also means that both parties can apply for a joint application. The hope is that being able to say that the marriage has simply failed, without putting blame on either party, will make divorce a much more amicable process. To top things off, the removal of the ‘fault’ element means parties no longer have to worry about applications being contested. Though bear in mind that divorce applications can still be contested on the grounds of the validity of the marriage.
When is the new divorce law coming in?
No fault divorce law is set to come into effect in England and Wales on 6th April 2022. Since 2015, campaigners have been pushing to overhaul UK divorce law. The divorce process can take months or even years. Couples often end up facing prolonged courtroom battles.
This means that from the 6th of April, one spouse can apply for a conditional order for divorce, otherwise known as a decree nisi, 20 weeks after the first filing. After 26 weeks, they can apply for the final order, ‘decree absolute’. As long as the correct procedures have been followed, the divorce will proceed even if the other spouse does not agree.
Even if both parties agree that there is no ‘fault’ on either end and have each other’s best interests at heart, it’s not always possible to achieve a quick, stress-free divorce. This is particularly true if there are disputes regarding matrimonial assets or children.
To make sure you’re not left short, it’s sensible to seek the services of a solicitor. An experienced solicitor will not just take care of the paperwork. They will also provide advice and make sure the correct procedure is followed. This will ensure the divorce progresses smoothly and, more importantly, that the most beneficial outcome is achieved. Getting legal advice at an early stage can make sure that you protect your legal position regarding finances and children.
Looking to speak to an expert? Simply contact us today via our online enquiry form or give your nearest Bromfield Legal branch a call.
Do you need more information before you appoint a power of attorney? Or perhaps you have just been assigned power of attorney and want to know your responsibilities.
Here we will dive into the specifics of what a power of attorney means, what the most common type of power of attorney is and what a power of attorney can and can’t do.
What does a power of attorney mean?
A power of attorney is a legal document that allows someone to make decisions for you, or act on your behalf, if you are no longer able to or if you no longer want to make your own decisions.
Who can be an attorney?
Anyone aged 18 or over who has the mental ability to make financial, property and medical decisions. It is important that you trust the person/people you choose to be an attorney. Your attorney could be a family member, a friend, your spouse or partner; or they could be a professional such as a solicitor.
Please note that your spouse does not automatically have the authority to make decisions for you if you lose mental capacity. Even if you are married or in a civil partnership, you must get a power of attorney document signed.
How many power of attorneys can I have?
You have the option to appoint one or more power of attorneys. If you appoint more than one attorney, they can act either:
‘Jointly’ – they must always make decisions together
‘Jointly and severally’ – they can make decisions together or individually
For example, you may want your attorneys to act jointly when deciding on where you live; but may trust one individual to pay your mortgage on your behalf.
A ‘jointly and severally’ appointment of power is preferred. This option reduces risk because the surviving attorney can continue to make decisions on your behalf.
Lasting power of attorney (LPA)
A lasting power of attorney (LPA) is the most common type. An LPA can be used in two circumstances; it can be used immediately with your permission while you still have the capacity, or it can come into effect when you lose mental capacity. To make sure you are covered in the future, it is a good idea to set up an LPA.
You can restrict the types of decisions your attorney can make, or let them make all decisions on your behalf. LPAs can be broken down into two types depending on your interest; property and financial affairs LPA and health and welfare LPA.
LPA for financial decisions
An LPA for financial decisions can cover things such as:
Buying and selling property
Paying the mortgage
Paying bills and debts
Arranging repairs to a property
Dealing with tax affairs
It is important to note that an attorney must keep their accounts and money separate from yours. You can ask for regular updates on how much is spent and how much money you have. If you lose mental capacity, these details can be sent to your solicitor – offering extra protection.
LPA for health and care decisions
An attorney can generally make decisions about things such as:
Where you live
Your medical care
Your day-to-day care, including what you wear and what you eat
Who you should have contact with
What kind of social activities you should take part in
In addition, you can give special permission to your attorney to make decisions about life-saving treatment.
What can’t a power of attorney do?
Although an attorney holds a lot of responsibility, there are a few things that they cannot do. Some examples of actions that a power of attorney cannot take are:
Change a principal’s will
Break their fiduciary duty to act in the principal’s best interest
Make decisions on behalf of the principal after their passing
Change or transfer power of attorney to someone else
When can my attorney no longer act on my behalf?
Your attorney no longer has the authority to act on your behalf when they:
No longer want to act as your attorney
Lose mental capacity
Were previously your spouse or civil partner but your relationship has legally ended since your LPA was registered
Become bankrupt or are subject to a debt relief order
What do I do if I lose my original power of attorney?
Without the power of attorney document, the agent cannot prove that they have the right to act on your behalf.
The Office of the Public Guardian can supply office copies of the original document and may charge a fee. Using the Office of the Public Guardian, you can also:
View a summary of an LPA
Check whether an LPA is valid
Check who the attorneys are on an LPA
If you still cannot access the document, a new power of attorney will need to be created. You should now be up to speed with the basics of what a power of attorney is and the responsibilities they have. If you are looking to create a power of attorney, we can advise and support you every step of the way with our services.
Contact one of our qualified and experienced solicitors today.
Let’s face it, thinking about leaving your loved ones behind can be pretty daunting. Many people put off writing a Will as no one wants to think about their own mortality. However, writing a Will is simply about making sure that your loved ones have clarity regarding your wishes when you pass away. That’s got to be worth reconsidering, right?
Knowing where to start isn’t always easy, especially if you’re not well-versed in legal jargon. And for this reason, lots of people choose to seek professional help from a solicitor. But, the question is, do I need a solicitor to make a Will? More importantly, will seeking the services of a solicitor make a difference? We hope to offer some clarity.
Can you make your own will without a solicitor?
A will is the only way you can make sure that your estate goes to the people and causes you care about. With that in mind, making a Will isn’t something you should take lightly.
First, you value your estate, decide who will get what and choose your executor. Then, the next step will be to write it all down. The good news is that there isn’t a need for a Will to be drawn up or witnessed by a solicitor. So, if you would like to make a Will yourself, it is possible to do so. However, if you decide to make a DIY Will, it’s important to make sure that it is valid. Using the wrong wording, or failing to observe the necessary formalities could impact how your wishes are executed or totally invalidate your Will.
When is it best to use a solicitor to make a will?
Disputes and misunderstandings are all too common problems for loved ones. In some cases, disputes may result in considerable legal costs that could potentially impact the value of the estate. With this in mind, it is usually worth seeking the services of an experienced solicitor, even if your financial situation isn’t complicated.
Say, for example, you have children with a previous partner. You will want to make sure that they are not left short. Having a solicitor advise you and prepare your Will can prove extremely useful. The solicitor will make sure that your Will has the effect that you want.
The benefits of using a solicitor to make a will
Using a solicitor to write a Will can offer you much-needed peace of mind. Let’s take a look at the benefits of using a solicitor to make a will.
You can appoint your solicitor as your executor. Deciding who to appoint as your executor can be tricky as there’s a lot involved. You need to appoint someone that you trust and who will be willing to take on such a big responsibility. A solicitor may be the perfect choice as they are experienced in estate administration and can easily navigate the process in accordance with the law.
If something goes wrong, you’re protected. You can make a complaint to your solicitor’s firm if you run into any problems.
Minimise the risk of mistakes. Using a solicitor will reduce the chance of your Will being invalid due to common mistakes, such as incorrect wording and using the wrong witnesses.
Save you time and money. A solicitor will take care of all the complicated bits for you
You will get expert advice and support. Solicitors will generally store the original copy of your Will in a fireproof safe at no additional cost.
How can Bromfield Legal help?
Here at Bromfield Legal, we work closely with you to tailor your Will to your specific needs. We will also help you manage your expectations about how your wishes will likely be dealt with when you pass. You can put your trust in our expert advice and support to make sure that your estate is divided properly and fairly.
After celebrating your happy engagement, the proposal of getting a prenuptial agreement, also known as a prenup, can feel like a bit of a kick in the teeth. While prenups may not be the most romantic option, they can offer some clarity if you and your partner fall in the worst of times.
For many, however, the possibility of divorce is as far as this conversation will go. But what happens to your assets if your spouse passes away? Will your prenup matter then?
This is a conversation that many of us would prefer to avoid. However, it’s important to know what happens to your prenup if your partner passes. Hopefully, we can put your mind at ease and offer some clarity.
Is a prenup for divorce or death?
The short answer is that prenups can help in both scenarios. Prenuptial agreements are not just for sorting out assets, they can also help protect assets in the event of death. For example, if the will and the prenuptial agreement work in tandem, the prenup can set out whether or not the surviving spouse has the right to claim the estate.
Many of us only begin to contemplate estate planning later on in life. But you don’t have to be up there in years to start thinking about making a will. You can use your prenup to set out what provisions will be provided when you pass. This will help avoid costly litigation if the surviving spouse later decides to claim against the deceased’s estate because they feel under benefited. Furthermore, this can be especially helpful in cases where the predeceased spouse does not wish to leave their entire estate to the surviving spouse.
No two prenups are the same. Conversations can turn pretty heated if you’re unable to reach a mutually beneficial agreement. That’s why seeking the help of an experienced solicitor can be handy. Both partners should seek separate legal advice to decide on the terms of your prenup so that they are fair and legally valid.
If you have already signed your prenup but the circumstances of your marriage change, you can potentially review and amend it. For example, you may have welcomed a new child or, perhaps, your incomes have significantly changed. Whatever the circumstances, a solicitor can help clear any doubts you may have over your existing agreement.
Does a prenup apply to death?
Although prenuptial agreements are not yet legally binding in UK courts, agreements can still be upheld in court. They must have been drawn up properly, fair, and not discriminatory towards any children.
Part of your prenuptial agreement may state that you cannot make any claims against your spouse’s estate when they pass. Nevertheless, such claims can be accepted under section 2 of the Inheritance (Provision for Family and Dependants) Act 1975 particularly if you share children. This is typically the case when the court feels that reasonable financial provision hasn’t been left to support the applicant and/or their dependents.
When an application is made for an order under this act, the court will consider the following:
The net size of your spouse’s estate.
Any applicant’s current financial resources and needs, and what they will look like in the foreseeable future.
The financial resources and needs of the deceased’s beneficiaries, and what they will look like in the foreseeable future.
If the deceased has any obligations or responsibilities to any applicants or beneficiaries of their estate.
If any applicants or beneficiaries have mental and/or physical disabilities.
Whether there are any other relevant matters to take into consideration, such as the conduct of the applicant or any other parties involved.
Is a prenup void after death?
Prenuptial agreements may still have an impact on how assets are divided when a person passes. Nonetheless, prenups should not be used as an estate plan. As we mentioned earlier, prenups should work in conjunction with a Will.
For example, your prenup can determine which of your assets are separate property. A will, on the other hand, will then determine who gets that property when your spouse passes.
Should you draw up a will when getting a prenup?
It might be best for both to have wills drawn up whilst getting your prenup. If either of you already has a will, consider reviewing it before signing your prenup. This will ensure that there are no inconsistencies. Having such conversations with your spouse as early on as possible means no one will be shocked or resentful when the time comes to read the will. Claims against the estate are also less likely to be made.
Emotions can run high when thinking about what life will look like if either you or your spouse pass. But seeking advice from an experienced solicitor can make such discussions easier to manage and less uncomfortable for everyone involved. What’s more, solicitors are well versed in financial matters. They will know which red flags to look out for when writing up a will or prenup. That way, you can rest easy knowing that you will be financially secure if your partner passes before you.
Both of you may also want to consider writing a letter of wishes to explain why you have decided to not leave some or all of your assets to certain loved ones. This letter will accompany your will so consider detailing how you would like your executor and/or trustee to handle your assets as well. That way, everything should be handled according to your wishes when you pass. A solicitor can also help you draft this letter and give you guidance on any issues you may want to consider when it comes to executing your wishes.
Seeking legal advice for prenuptial agreements
Getting married is a big life goal for many people. We know how difficult planning your future together as a couple can be. The last thing you need is the headache of worrying about divorce or death during these otherwise joyous moments. You can put your trust in our experts to make this process as smooth and simple as possible.
We will always do what is right for you and your loved ones, so you don’t have to worry about the future. If you need to speak to one of our experts in family and divorce law, feel free to contact us or fill out our online enquiry form.
Transfer of equity is the process of you adding or removing someone from the deeds of a property. It is also sometimes referred to as property transfer. There is no sale of the property and at least one of the original owners will stay the same. There are a number of reasons why you may want to do a transfer of equity.
Arguably the most common reason is that you are separating from your partner and dividing up assets. Or perhaps you bought a property yourself but are now in a relationship and would like to add your new partner to the deeds. Maybe you are buying out the equity of a joint owner, or even transferring equity to your children or another family member to provide a financial gift in a more tax-efficient way.
Whatever the reason, you will need to go through the transfer of equity process. There are a few moving parts, but we are going to break it all down for you in this article.
How does transfer of equity work?
When all parties agree on the outcome and the terms and conditions are clear for everyone involved, a transfer of equity can be pretty straightforward. There can be elements that complicate the process, however, such as disagreements and mortgages.
White paper houses lined up on grass
In simple terms, the process of a transfer of equity is as follows:
Step 1 – To start the transfer process, your solicitor will obtain an official copy of the title deed for the property. Your solicitor will review this to check for a mortgage or any other restrictions on the property. As the property’s ownership is changing, you may need to apply for a remortgage or a new mortgage deal if applicable. Speak to your provider or a financial advisor about your options and try and agree a mortgage in principle if possible.
Step 2 – If someone is being added onto the property deeds, you will need to instruct a conveyancer or a solicitor who specialises in conveyancing. In this instance, both parties can be represented together. If someone is being removed from the property deeds, the parties will each need to have separate legal representation.
Step 3 – Your solicitor will take care of the legal work and prepare the transfer documents, confirming things with your mortgage provider (if applicable), as well as the property’s freeholder (if applicable). All third parties will need to be notified and will also need to provide their written consent. Your solicitor will then send the mortgage deed for you to sign.
Step 4 – The process is complete and your solicitor will facilitate the transfer of any funds between parties. Outgoing parties will need to complete and sign an ID1 form in the presence of their solicitor.
Step 5 – Lastly, your conveyancer will calculate any stamp duty liable to HMRC and facilitate the payment of this. They will also ensure that details of the new property ownership are logged with the land registry. This will involve a fee, which can range from around £50 to nearly £1000. It depends on the value of the property.
Of course, it is not always that straightforward. It depends on different factors, such as if mortgage lenders are involved. In some cases, there can be more than two parties involved, for instance, if someone is remaining on the title deeds, someone is being removed from the title deeds and a third party is being added onto the title deeds.
In the instance that someone is leaving the property, the remaining party will need to ‘buy’ the other party out. This will usually involve remortgaging with the existing lender or transferring the mortgage to a new provider altogether.
How long does a transfer of equity take?
Generally speaking, a simple transfer of equity can take around 4-6 weeks to complete. Every transaction is different, however, and it depends on the situation and how complicated it is. If there is a mortgage on the property, the transfer will take longer as you will have to wait to receive written consent from any lenders involved.
If one party does not give consent to the transfer of equity or if the transfer is required as part of a larger legal dispute – for example, a divorce that is being resolved by the Court – this will also throw up delays in the process.
Do you pay stamp duty on transfer of equity?
Whether stamp duty land tax needs to be paid will depend on the ‘consideration’ and the nature of the transfer. ‘Consideration’ refers to the amount of the property that you will take over from the previous owner. Whether you pay stamp duty will be dependent on the size of the consideration. This includes both the equity (value of the property) and the value of the mortgage.
Not all situations where you might need a transfer of equity will result in needing to pay stamp duty. Here is a breakdown of when you might need to pay stamp duty:
If you are not married or you are in a civil partnership and transferring to one person, you may have to pay stamp duty
If you are gifted a property with a mortgage, you will have to pay stamp duty on the portion of the mortgage that you now own, even if the payments do not transfer to you
If you are buying a portion of the equity and the mortgage, you will need to pay stamp duty
You might not need to pay stamp duty if:
You do not have a mortgage
If you are divorcing
If you have inherited a property in a will, even if it has a mortgage
Transfer of equity costs
Alongside possible stamp duty land tax (which is usually the largest cost), you may come across other costs associated with a transfer of equity. Additional costs do depend on whether you are adding, removing or replacing someone on the deeds, and whether the property is leasehold or freehold. The amount of these costs will differ hugely between individual circumstances.
Here are some of the other costs you may need to budget for:
Conveyancing/solicitors fees – this will depend on your conveyancer/solicitor, the property value and whether you need to remortgage the property
Legal fees – these fees depend on the solicitor. Some may include it in their general charges and others won’t. These fees often include ID verification, a copy of the property’s register of title and ownership change registration
Mortgage fees – some banks will charge you their fees. These include service fees that cater to administrative costs involved in the process.
Can I do a transfer of equity myself?
Whilst yes, you can do a transfer of equity yourself, it is highly recommended that you turn to a solicitor to do it for you. In the simplest of cases, it is just a case of arranging the document that both you and the person you are transferring to or from the deeds have to sign. This will then need to be sent to the land registry.
If the situations surrounding the transfer of equity are more complex, then it is best to speak to enlist the help of a solicitor to help you. Make Bromfield Legal your first choice for transfer of equity services. Our transfer of equity solicitors can help you get a house deed legally changed, whilst avoiding any potential mistakes.
You can trust our qualified and experienced team of solicitors. Contact us today to find out more.
If you have a mortgage, there will come a time when you might consider remortgaging. In a nutshell, remortgaging is the process of taking out a new mortgage with a new provider on a property that you already own.
Remortgaging is important as it’s a way of ensuring that you have the best mortgage product available to you. Just as you would shop around once your car insurance policy is coming to an end, remortgaging works in a similar way.
Why should I remortgage?
There are many reasons why you might want to remortgage. Remortgaging can help you to reduce your monthly payments, find a better deal or pay your mortgage off sooner. Usually, people choose to remortgage because their current deal is about to end. If you are due to be put on your lender’s SVR, then you may wish to remortgage to avoid higher/variable rates.
Remortgaging can also allow you to borrow more money against your home in order to release capital. Perhaps you want to carry out some home improvements or buy a new car. When your deal is coming up to expiry, a mortgage broker can research raising additional money against the security of your house. This is handy if you are in need of some extra cash.
If you want to change the length of your mortgage, you can do this by remortgaging. You can remortgage to extend your mortgage over a longer period of time to bring your monthly payments down. This could be over 25/28/30/33/35 & up to 40 years (age permitting).
On the flip side, you may find yourself with some extra money at the end of each month and you wish to reduce your term down from 25 to 22 years, resulting in you paying your mortgage off early.
Lastly, if the value of your home has increased, you might be able to remortgage and be placed in a lower Loan to Value (LTV) band. This makes you eligible for lower rates. Remortgaging does come at a cost though, so make sure the amount you’d be saving is enough to warrant the decision to remortgage.
How much does remortgaging cost?
There are numerous fees involved in remortgaging. You need to be aware of these fees in order to work out whether remortgaging is worth it for you.
Arguably the most important fee to be aware of is the early repayment charge. Whether or not you need to pay this will depend on when you are remortgaging. If you are coming out of your current mortgage deal early during a tie-in period, you will be faced with this charge. It is usually a percentage of the outstanding mortgage debt.
This is the lender’s way of recouping some of the interest they will be losing as a result of you breaking your deal early. For example, on a five-year tracker deal, the early repayment charge could be 5% in year one, 4% in year two, 3% in year three and so on. With this in mind, the early repayment charge can be a significant fee. You would need to find a new deal with a much lower monthly payment than your current one in order for it to make financial sense.
To avoid this fee, make sure your remortgage completes after your current tie-in ends. This is usually when your mortgage incentive period ends.
Other fees to be aware of are:
Deeds release fee – around £50-300
Arrangement (product) fee – around £1000
Booking fee – around £100-200
Valuation fee – around £300-400
Conveyancing fee – around £300
Mortgage broker fee – around £300
Remortgaging vs product transfer
Remortgaging is not to be confused with a product transfer, or a product switch as it is often known as. A product transfer is essentially when you switch to a different mortgage product with your current lender. Unlike remortgaging with a different lender, a product transfer is not normally considered to be new lending, unless you are borrowing an additional amount.
A product transfer is generally a quicker (4-6 weeks) and simpler process. This is because your current lender ought to have your details to hand from your original application. You also don’t need to supply wage slips or any documentation. It is just a simple swap of mortgage products. You generally have less fees to pay as well, as you are able to avoid legal costs and valuation fees.
The downside is that you might not get the best deal available by limiting yourself to solely your current lender. Plus, your current lender may do all they can to encourage you to stick with them so as to not lose your business. This can leave you confused. It’s a good idea to shop around for peace of mind that you are making the best decision.
By remortgaging with a new lender, you will have access to more deals. You may even receive incentives such as cashback, a free valuation or free legal fees in order to attract you as a new customer. You will be hit with more fees, however, and you will have to submit a new application and start the remortgaging process from scratch. The best decision for you will depend on your individual circumstances.
If you need support during the remortgage process, we at Bromfield Legal are here to advise. Once you have an offer, one of our expert solicitors can provide the remortgage conveyancing on your behalf.
Simply get in touch with us today and arrange to speak to someone at your nearest Bromfield Legal office.
In a divorce, pension funds can often be the biggest asset after the family home, however, they are often overlooked. You will be entitled to part of your ex-partner’s pension, and vice versa so these can be split appropriately during the divorce procedures.
You may have accumulated a number of different pension investments during your working life, from personal pensions, workplace pensions and NEST pensions to name just a few. Your ex-partner may have a right to some or all of these schemes and this can raise feelings of contention.
Why does a spouse have a right to my pension?
When you have built up your own pension funds over the years, it can be difficult to accept splitting it in the event of a divorce – particularly if your ex-partner has been unable to build up a comparable pension pot. This is quite often the case, if a woman has, for example, had to take career breaks to raise a family.
Brown money bag with the word ‘pension’ written on it
Your ex-partner may have a stake in your pension funds, or you may have a stake in theirs. This is because pensions built up during the marriage are considered to be matrimonial assets and as such, should be available to be split. As a starting point, assets may be split on a 50:50 basis, however, this will probably alter based on the individual factors in each case, which may include:
Whether your partner has their own pension fund which needs adding to the pot before equalising
Whether the entirety of the pension was built up during the marriage (including prior cohabitation) or whether there is any pre-marriage or post-separation accrual
Whether the equalisation of the pensions will meet the parties’ needs
The age of the parties, including whether they are of a similar age and how far away they are from retirement.
However, there are many other factors that will be relevant and that may significantly affect how pensions are dealt with.
How are pensions split?
Pensions are divided via a court order, and whether the courts agree to split the pension will usually depend on the pension provisions of each party. If there’s a significant imbalance in pension provisions between the two of you, then the courts are more likely to try and balance this out by sharing one spouse’s pension with the spouse with little to no pension savings.
There are four common ways of splitting pensions; a pension sharing order, pension offsetting, pension attachment (or ‘earmarking’) or via an individual agreement.
With a pension sharing order, one spouse is given a percentage of any one or more of the ex-spouse’s pension funds by court order. The sum is either transferred into a separate pension scheme or by joining the ex-spouse’s pension scheme and this percentage of the total fund is allocated to the receiving spouse. Either option will be dependent on the rules of the pension scheme.
Pension offsetting is when the value of any pensions is offset against other assets. For example, you might agree to keep the pension fund and your ex-partner might agree to keep the family home. It’s really important to have an accurate pension valuation in this instance to ensure that the divide is equal and fair. Pension offsetting does not necessarily require a court order.
Pension attachment or ‘earmarking’ is when some of your pension benefits at retirement are paid to the ex-partner. This can be done in either a lump sum or as part of the pension income – or both. This only comes into play once the pension holder has started taking their pension. In this instance, you would effectively be deferring the split of the asset until you reach retirement age. As with pension sharing, this arrangement will require a court order.
Lastly, you could come to an individual agreement between the two of you. You might decide to forgo any claims on pension assets in favour of a more balanced settlement of other divorce terms. One party might get better child access arrangements, or child maintenance if they agree not to claim against the other party’s pension assets. You can ask the court to approve an individual agreement and turn it into a court order to provide more protection, just in case a dispute arises at a later date.
Remember – seek legal advice when opting for any of these options. As with most divorce-related issues, it can be both a complex and emotionally charged area to navigate, and the costs of making the wrong decision or not having all the relevant information can be substantial.
How long after a divorce can you claim on a spouse’s pension?
So long as you haven’t achieved a legally-binding financial settlement, there’s no time limit after a divorce for making a claim on an ex-spouse’s finances. The divorce itself only means that you are no longer married – it does not always settle your financial affairs.
If you are looking to protect your pension against this happening, then it is highly advisable to seek a formal financial agreement whilst you go through the divorce process. Even if it all seems amicable now, this can change in the future. A legally-binding divorce financial order will separate your finances from your ex-partner for good, leaving you to both continue with your independent lives.
How to find out the value of your pensions
As part of the financial disclosure required in divorce negotiations, you will need to find out the up-to-date ‘cash equivalent transfer value’ of all pension investments you have. You can obtain these valuations from the pension scheme administrators, although there is sometimes a fee for this service. For work-based schemes, you may need to go through your employer’s HR or payroll department for this information.
Your divorce solicitor will be able to help you through the legal process, the negotiations with the other party and guide you on what you can and can’t claim for or how to respond to claims against your pension. They will also agree and draw up the final divorce agreement, as well as preparing the documents for final court approval to legally dissolve the relationship.
The financial side of a divorce can be really difficult and emotionally charged. Whether you are trying to protect your pension funds, or ensure that you are not left short – at Bromfield Legal we will always try and achieve the fairest outcome for you, doing what we can to make the process smooth and straightforward. For more information, or to arrange an initial discussion on how we can help you, please contact us.
You and/or your partner may decide to get a divorce in order to end your marriage. You can only get a divorce if you have been married for at least one year. In an ideal world, you will both agree to want the divorce and the reason why – in which case the divorce process is fairly straightforward. If you or your partner don’t agree to a divorce, it will take more time and cost more money.
There are four main stages to a divorce; filing the divorce petition, filing the response to the divorce petition, applying for the Decree Nisi, and applying for the Decree Absolute. In this article, we will talk through each of these stages.
The five facts of divorce
Before you apply for a divorce, you should try and agree on a reason for your divorce to show that your marriage has broken down. There are five reasons that you can choose from, and these five facts are:
Separation for two years with agreement to divorce from your spouse
Separation for five years with or without agreement to divorce from your spouse
Divorce in England and Wales is currently fault-based, meaning that you do need to choose one of these facts to support why your marriage has ended.
How to file the divorce petition
The petition can be filed with the court either online or by post. Once the petition has been prepared, it is sent to the nearest divorce centre. It is important that the petition is properly drafted to avoid problems and delays to the process. The marriage certificate needs to be sent with the petition (the original or an official certified copy), and there is a fee to pay of £550.
It is possible to apply for an order that your spouse pays the costs of the divorce proceedings, in which case the application is made in the petition. If the court agrees, it will make an order that your spouse pay you the costs back when your divorce has been finalised. You could also agree to split the costs equally between you.
Either way, the person who makes the application to the Court for divorce is known as the Petitioner, and the other person is known as the Respondent. Once the divorce centre has reviewed the petition, they will send a copy to your spouse to give them a chance to respond.
Remember, whilst it is possible to manage your divorce yourself, the divorce petition alone can be a complex and lengthy form to fill out. If you are instructing a solicitor to represent you throughout your divorce proceedings, they will handle the completion of the petition. This means you’ll avoid any costly mistakes and delays.
Responding to a divorce petition
As a Respondent, you must send an Acknowledgement of Service form to the Court within 8 days of receiving the divorce petition. This lets the Court know that you’ve received the divorce petition and whether you agree with the divorce or whether you disagree.
If you do want to defend the divorce, you have 21 days after returning the Acknowledgement of Service divorce petition to send a defence to the Court. This will cost you £245. If you or your partner disagrees with the divorce, it is strongly advised that you seek legal advice from a qualified family law solicitor.
The Decree Nisi
If the divorce is not defended, as the Petitioner, you will then need to apply for a Decree Nisi. The Decree Nisi is the Court’s way of saying that they see no reason why a divorce cannot be granted. It also fixes the earliest date when the application can be made for the Decree Absolute, i.e. when your marriage will end.
In order to apply for a Decree Nisi, it is necessary to file with the court an application, together with a statement in support that confirms that all of the information in the Petition is correct. If everything is in order and there are no concerns, the Court will fix a date for the pronouncement of the Decree Nisi.
The Decree Absolute
After the Decree Nisi has been pronounced, a minimum of six weeks and one day have to elapse before an application can be made for the Decree Absolute. The Decree Absolute ends your marriage. It does not, however, end the financial commitment between you and your spouse. It is open to either party to make claims in respect of financial matters either before or after the Decree Absolute, unless an order is made by the Court. This is where using a solicitor in your divorce is important. They will ensure that you get a fair settlement and that you get what you are entitled to.
Once the Decree Absolute is made, the divorce process is complete and you are legally divorced. This entire process will usually take around 4-6 months, but it depends on whether the situation is contentious, whether you have child arrangements to consider and whether you run into any issues with splitting money or property.
Why use a solicitor when getting a divorce
A solicitor really can be invaluable when getting a divorce. They can help you decide on which of the five facts for divorce you want to use, and let you know what evidence you will need. They can also be the middle-man between you and your ex-partner so that you don’t have to communicate with them if you don’t want to.
If you can, it is best to use a solicitor – and one that specialises in divorce and separation, such as us here at Bromfield Legal Solicitors. We’re here to make the process simpler, smoother and quicker. We will always do what is right and fair to obtain the best outcomes for our client in a divorce. For more information on how we can help, please contact us.