Buying house from parents?

gsf600y

I'm currently living in my parents 2nd house. They have no mortgage on it.
They have said they are happy to sell it to me and my wife.

I'm not really sure though (and neither are they) what steps are needed to do this?
Are there any shortcuts/savings to be made by buying from my parents?

Do we both just arrange solicitors? What do the solicitors do?

We're looking at a 95% mortgage, and the house is worth £160,000

They originally inherited the house, so I believe would have to pay CGT on any profit in the house price since they inherited it.

Any advice or tips would be greatly appreciated

Thanks
Patrick

Claire_DC

I don't actually know for sure if there are and have never been in this positoon myself so this suggestion may be completely silly/out of the question and maybe even illegal lol.. but if they are not desperate for the full cash up front, could you not get the deeds changed into your name and pay the money into your parents bank account each month, maybe the same amount as a mortgage would cost but all of it would go towards paying off the house price instead of interest?


Forgive me if i am completely way off here - as i said i don't know how feasible it is but i thought it couldn't hurt to mention it lol.

Weymouth_Man

Claire_DC wrote:

I don't actually know for sure if there are and have never been in this positoon myself so this suggestion may be completely silly/out of the question and maybe even illegal lol.. but if they are not desperate for the full cash up front, could you not get the deeds changed into your name and pay the money into your parents bank account each month, maybe the same amount as a mortgage would cost but all of it would go towards paying off the house price instead of interest?


Forgive me if i am completely way off here - as i said i don't know how feasible it is but i thought it couldn't hurt to mention it lol.

Claire DC, Look's like your Avatar puts you in a interesting Position.:beer:

Claire_DC

Hahahaha, that's only a section of the photo.. although i can assure you that it was all totally above board.


Although you are correct, there was drinking involved haha.

Weymouth_Man

Hope you find MSE useful, Welcome .:beer:

Claire_DC

Why thank you.. i'm hoping it is very useful.. i could do with saving (and making) some extra cash haha. x

gsf600y

Claire_DC wrote:

if they are not desperate for the full cash up front, could you not get the deeds changed into your name and pay the money into your parents bank account each month

Thanks for the suggestion
Unfortunately, my parents want to use the money from selling the house to us.

One idea a guy at work came up with is if I could get the house put in my name, I could then get a mortgage on a house that I own.
Not sure if that is even possible though, or if they would give a 95% re-mortgage.

xmaslolly76

Hi I was going to suggest that you have the house put in your name first then apply for a mortgage on it. You would avoid stamp duty then as well i think, as for the legallity of this i'm not sure one of the clever people will be along shortly no dought and can offer some proper advise

Claire_DC

gsf600y wrote:

Thanks for the suggestion
Unfortunately, my parents want to use the money from selling the house to us.

One idea a guy at work came up with is if I could get the house put in my name, I could then get a mortgage on a house that I own.
Not sure if that is even possible though, or if they would give a 95% re-mortgage.

Ahh that is unfortunate!

Yes, you could look into doing the remortgage thing.. it would cost about £500 to change deeds i'd expect, and you can shop around the banks with the best deals to see what they say about the remortgage itself.

It's definitely worth looking into imo!!

exil

If the parents make a gift of the house, or sell it cheap, CGT may still be payable as the relevant value of the house is the market value, not what you now pay for it. And as the OP says the parents want the money, and why not!

There's also an IHT angle, could be further taxed if parents die within 7 yrs. This is avoided if the full market price is paid.

Alternative - rent the house? Wouldn't provide a lump sum but would provide an income stream for the parents.

Jersy

could u not buy the house for £1 just to change ownership

the problem is that further payments to your parents would be on a gentlemans agreement

Im not sayin you wouldnt pay, what i mean is that if there is a family fall out your parents are at risk of not recieving the money