PLEASE HELP! My mum wants to transfer mortgage to me - how?

raps

Hi!

My mother is 63 years of age with a mortgage of £160k (interest £120k, repayment 40K) on a fixed rate of 4.99% which finishes march 2009.There is 8 years left of the mortgage. She has tried remortgaging to full repayment mortgage but banks are not reluctant to help her because of her age. They want proof that my mum can support the mortgage after her retirement (age 75+) and we have said that her 4 sons will take over the mortgage, but that's not sufficient. So she wanted to transfer the mortgage to my name (age 25, salary 60k/year) so the monthly payments are cheaper and the mortgage is on a full repayment so the mortgage goes down. Our house is valued at the moment at £495,000.00!

Is there a way of transferring the mortgage to me without any problem, or does anyone know of a solution of my situation?

If anyone knows, can you give me a breakdown on the stages of the process and roughly how long it will take and how much it will cost?

Any advice will be much appreciated!

Thanks!

happybroker

quick answer is no I'm afraid.

Do you live with your mum? If so you could apply to go onto the mortgage also though it's not a given that they will accpet this.

The only way you will be able get everything into your name is to "buy" the property from her with a mortgage of your own. If you "buy" the property at the level of the mortgage then you will be buying at undervalue which has it's own implications.

You need really to get some proffesional advice on this, it's far from straight forward. You also need to consider things like what happens when you want to move out etc etc

Tread carefully and good luck

EdInvestor

raps wrote: »

Hi!

My mother is 63 years of age with a mortgage of £160k (interest £120k, repayment 40K) on a fixed rate of 4.99% which finishes march 2009.

Will she have a problem paying the standard variable rate, onto which sahe will be migrated when the deal ends?

If not, and she/you have spare funds, just stick with the same lender and overpay the loan.

silvercar

How was she intending to repay the interest part of the loan?

Why was a mortgage ever set up that lasted into retirement?

It may be possible to put the house into joint names and the mortgage would then be in joint names, based on your salary there shouldn't then be a problem securing the mortgage.

raps

We were planning on paying the interest part off by transferring the mortgage to my brother and my name to full repayment mortgage, so we takeover paying off the mortgage. Our family work different; my mother has taken money out of the house to fund our education etc. and once we graduate and get a job we will take over the mortgage and pay it off, that was the plan but the banks are being awkard. I am going to be working as a newly qualified Doctor from August and my brother a Pharmacist. The bansk still don't care!
We were in the process of Joint name mortage with our lender (Bank of Scotland) but they said that it doesn't matter how many people you put on the mortgage, my mum is the sole borrower and we will need to know if she will be able to afford into retirement and they want proof of that i.e. ISA, endowments etc. The lender does not understand that me and my brother are the 'ISA' as we will end up paying off the mortgage.
We don't want to keep this current mortgage because it is mostly on interest which means we'll have to pay a £140k in 8 years time, in lump sum. But we've got good salaries so we want to take the advantage of a full repayment mortgage over 25-30 years, so it's cheaper for us to pay monthly and we don't have to worry about the lump sum. The lender does not understand this and they are still wanting to see proof of my mums ability to afford into retirement. Why?

EdInvestor

I guess you will just have to give your Mum the money to repay the loan then.

money_maker_3

Why is because the FSA want all banks to show that they are lending responsibly and that if she took a higher monthly payment over a longer term, then they need to know that SHE would be able to repay it if anything happened ie. can't rely on family as there could be a break up of communication or one of you could refuse to pay anymore (I'm not saying that would happen, but the bank has to think it might)

If you are with B of S then they should be able to offer what is called a TOMP or a transfer of mortgaged property from one name to another, but you would really need to speak to a solicitor before you considered this as an option as although it would transfer the mortgage into your name, there would still be inheritance tax implications among others such as it would be a commitment for you, so if you wished to buy a property in the future, you would have to declare this one as a credit commitment.

silvercar

You probably need the ownership to match the mortgage, if you want all the incomes to be taken into account by the lender. Why not use a mortgage broker? There are graduate mortgages around where you future income will be taken into account.

Ian_Griffiths_Halifax

Check with the lender to see if your mum is able to overpay on the mortgage. I'm fairly certain she'll be able to overpay by upto 10% of the mortgage balance per year without penalty, but do check first. You'd then be able to start overpaying immediately rather than waiting until the deal ends in March next year.

In December start looking at possible remortgages in whatever names you want on the mortgage. There are loads of lenders who will allow you a mortgage so long as you don't have any adverse credit, but use your income and your brothers income as the main incomes, not your mothers.

There are some lenders who may only allow 3 or 4 people on the mortgage (you said there are 4 sons and I'm assuming you are one of them so there are 5 people in all), but get your broker (please use one as you won't get the advice you need by going direct to a lender) to check if the lender would allow more people on the deeds than the mortgage. This would protect the interest of anybody not on the mortgage.

Alternatively, you could set the new mortgage up in the 3 names, you, brother 1 and mum, but set the ownership up on a 'Tenants in Common' basis. This allows for an identifiable amount of ownership of the property.

If all of the brothers were contributing to the mortgage, and not your mum, but only 2 were on the mortgage (this is where it gets a bit confusing if it isn't already), then I would suggest 25% to you, 25% to brother 1 and 50% to mum. Mum could then put in her Will that she wanted her share of the house to be split equally between the two other brothers.

If the two other brothers aren't contributing, then I'd suggest another split as it would be unfair that you and brother 1 have paid the mortgage off and yet they get their 25% share. That's where you need more advice on a face to face basis and also take advice from a Solicitor.

Whatever you do, it's too complicated for a forum. Speak to a Broker and speak to a Solicitor.

bo_drinker

They are going by the book to the letter. Many of them had not been doing this for years and this is why we are where we are now. You need to seek professional advice in which way to go with this and maybe find someone who can bend a few rules.(not easy) You know you can pay the mortgage but either way it's not a simple one. Good luck

raps

Thank you all for your advice, its been VERY helpful! I just like to clarify some points:

I do have a mortgage broker that I will be meeting in the next few days to solve our situation. In terms of the splitting of the mortgage etc. basically altogether there are 4 sons and 1 daughter in the family, my 2 elder brothers have moved out of the house as they are married so it leaves me, other brother and sister. MY mum has said should anything happen to her the house will be given to my sister, and we are ALL fine with that, because that's how our culture is. So, now in terms who is paying the mortgage, me and my brother immediately older than me, are wanting to be on the mortgage with my mum or without my mum but my mum is still the owner of the house! This is because as I said, the monthly payments are cheaper and it is full repayment. So thats the situation with our family.

Silvercar - you mentioned something about graduate mortgages, I didn't know this had existed, can you give me more information on this, and what banks do this?