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Joint Offset Mortgage - both names?

I am living with my partner in a property solely in his name. Rounding up the numbers ... he bought it for 75K, put down a deposit of 25K and got a 50K mortgage. The mortgage has finished its fixed rate and is now on standard variable rate. My parents were going to help me with 25K for a house deposit but I was thinking it would be a good idea to contribute this to my partners mortgage hence the idea of an offset mortgage.
From what I've read it seems that to have a joint offset mortgage you need to have both names on the deeds of the house. Is this right?
Also, I'd somehow like to make it clear how the money involved is allocated. My parents insist on this sort of 'protection' before they would be happy to transfer it to me. I have got rapidly confused already. It's not a prenuptual agreement! Is anyone able to offer me any advice or links? I am just trying to help but it's got too complicated!
Thanks
NM

Comments

  • Senior_Paper_Monitor
    Senior_Paper_Monitor Posts: 2,918 Forumite
    Part of the Furniture Combo Breaker
    edited 30 December 2009 at 11:49PM
    'Generally' the extra set-up costs and higher interest rates of most offset mortages (compared with standard mortages) is only worthwhile where the property owners having fluctuating or expected change(s) to income/financial position, i.e self-employed or expecting inheritance/promotion etc). Not a 'set in stone' definition' but a general guide.

    You may or may not benefit from using offset in your circumstances - your injection could be in the form of a loan to be used within the offset rather than the equity, which in theory means that funds would be easily releaseable if the mortgage holder (in this case possibly just your partner) chose to pay you out, but I am sure your parents (absolutely sensibly) would want a clear written agreement to secure the funds and have repayment on demand possible - but even that could be difficult to enforce and you would not have a charge established (and even if possible it would be second to the mortage) on the property which is presumably the only asset. If you put it in as equity it would effectively become a gift unless you go on the deeds - I would strongly recommend 'joint tenancy' together with a general settlement basis agreement, plus wills and supporting trusts and probably supporting cross life insurance in place

    It would seem to me that a normal remortage (at c33% LTV you would get excellent rates), adding you to the deeds (on a joint tenancy basis) with a general settlement basis agreement, plus wills and supporting trusts and probably supporting cross life insurance in place would be the most sensible way to proceed.

    My usual advice ...... find a good adviser familiar with such structures, let them collect all the background details and your joint wishes (which may not be the same) before recommending an appropriate structure.
    Hi, we’ve had to remove your signature. If you’re not sure why please read the forum rules or email the forum team if you’re still unsure - MSE ForumTeam
  • Let_Us_See
    Let_Us_See Posts: 1,319 Forumite
    From what I've read it seems that to have a joint offset mortgage you need to have both names on the deeds of the house. Is this right?

    Correct.

    Offsets are available from a competitive 2.89% and is probably the best method of reducing mortgage whilst retaining control of the £25k. See a solicitor to draw up a simple understanding that the £25k remains in your/parents ownership.
  • gjchester
    gjchester Posts: 5,741 Forumite
    I looked into this when I got married, the house was in my name, and to add my wife we'd effectivly have to re-mortgage again with the same offset (this was with the Woolwich before they were swalloed uyp by Barclays).

    That menas paying for surveys, solicitors fees and any mortgage fee's again just to move it into joint names. We talked about it and needless to say I guestimated this at £1k for the fee's, and we payed that into the mortgare rather than lose it just to put it in joint names.

    Check the costs, if you get £1K of fee's thats a lot of interst you could be offsetting/ capital paying rather than paying laywers and fee's
  • Senior_Paper_Monitor
    Senior_Paper_Monitor Posts: 2,918 Forumite
    Part of the Furniture Combo Breaker
    edited 31 December 2009 at 2:32PM
    The most attractive rates (for all types of mortgage) are where the LTV is in the lower ranges - if you use an offset with the additional funds in the offset rather than the loan portion it will still be at the higher rates (because the loan available is at the higher LTV and it stays constant whether the full loan facility is being used or not). I think you are unlikely to achieve the rate indicated by 'let us see' unless you put at least part of the additional funds in as equity (in which case the potential benefit of the offset is reduced as you have less flexible funds available as your 'safety/escape mechanism')
    Hi, we’ve had to remove your signature. If you’re not sure why please read the forum rules or email the forum team if you’re still unsure - MSE ForumTeam
  • Let_Us_See
    Let_Us_See Posts: 1,319 Forumite
    edited 4 January 2010 at 1:17PM
    Offsets: 2.89% - 60%LTV; 2.97% - 70%LTV; 3.29% - 75%LTV;

    At the end of the day your action comes down to whether you need to control the £25k. If you wish to reduce your mortgage whilst still having full access to the £25k then offset is best - with previous proviso. If you simply want to reduce borrowing by repaying £25k capital, then offset is probably not best option. However, even if you became party to the mortgage you may still need legal agreement or charge on property to safeguard your £25k contribution.
  • Thank you all very much for your replies! I am a bit clearer on the subject.
    a clear written agreement to secure the funds and have repayment on demand possible - but even that could be difficult to enforce and you would not have a charge established (and even if possible it would be second to the mortage) on the property

    so a legal agreement/charge would be difficult to enforce in case I wanted to take the money out myself? paying legal fees is one thing, but if the agreement is almost useless, what would be the point :huh:
    do I understand this correctly?
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