selling house to son

tpat5068

Hi. Hoping someone can offer some advice on current situation. Having both returned to full time education, my wife and I are "stuck" with a variable rate endowment mortgage which has @3years to go. Having limited income we are not in a position to negotiate a new deal at present but have been discussing the benefits of selling the house to our grown up sons who are both earning but still live at home. If they could organise a decent fixed rate mortgage we could redeem our current loan and eliminate any future worries in respect of endowment shortfall in 3 years time. All parties are keen to act and happy that the house will remain the family home but not sure if there are any potential pitfalls or unforseen barriers to this plan. Any ideas?

Jockthearab

Firstly, welcome to MSE!

Whilst in principle it sounds a good idea, you would effectively be tenants of your grown up sons. What's going to happen should they meet someone & want to settle down, getting their own home? They'd possibly be stuck trying to get another mortgage & have to either sell 'your' home or move in...perhaps asking you to move out?! What IF you fell out (as families can & do!)?
Hope this doesn't come across as negative & cynical, but IF you decide to go down this path I'd urge you all to seek independent legal advice first.

JtA

tpat5068

Cheers jock. The boys are actually still based in the family home. We have discussed the possibilities re meeting partners and wanting to get their own places. However we are viewing this as a temporary solution and that these future issues would not be problematic for the family as a whole.
I was more concerned as to how it would be perceived by lenders or inland revenue. The mortgage required by the boys would be less than half the value of the house. Are we allowed to sell to them at this reduced price?

HappyMJ

You can sell your house for any value you wish. Have you asked the bank if you could continue the mortgage for a few more years to clear the difference between what the endowment pays and the outstanding mortgage. Are you charging the boys rent? They'll (most probably) end up with it eventually won't they so for them paying rent now means they'll inherit a house with no mortgage later.

tpat5068

Although not the main purpose for the switch, both boys are in jobs that would subsidise housing costs if they are named as responsible for council tax so they are quite happy to pay the mortgage payments, with us continuing to pay endowment premiums.

Jockthearab

Perhaps if you could post more info such as type of endowment, who your endowment is with, outstanding mortgage balance, current value of property etc some of the experts on here will give better advice than me!

Personally I would not sell the property to your sons BUT investigate if they could be added to the ownership of the property. As I said earlier, this would need to be discussed with a solicitor so that all legal possibilities are understood by all the family.

JtA