Adding my parents to my mortgage - legal & tax issue

cheers_drive

In order to take over the mortgage from my ex my parents have offered to come in on the morgage. The mortgage company is happy with this and I will pay all of the mortgage payments, get all of the proceeds / loss from the sale. And obviously if I can't pay they will have too.
Google searches haven't come up with any clear answers on tax, inheritance and CGT was mentioned but we had a tenancy in common agreement where I had 100% of the property I can't see the issue.
Will a solicitor sort all this out or will my parent and / or me need a financial advisor too?

silvercar

You want it noted that you are the beneficial owner, you will pay the mortgage and outgoings, but your parents are coming on the mortgage (and ownership) in order to get the mortgage. Its never clear cut, but you are trying to establish that you are the beneficial owner, even though others are noted on the deeds. Google "beneficial ownership" and "tax" for more guidance.

G_M

Speak to HMRC. If your parents are registered owners, they may have to pay CGT as it's a 2nd home - though silvercar's beneficial owner agreement may get round this. HMRC will confirm.

Legal? You won't be able to sell without your P's agreement.

Inheritance? I guess if they pass the house to you in their wills then you'll own the house!

Fire_Fox

Can't your parents simply act as guarantor on the mortgage?

cheers_drive

Can't your parents simply act as guarantor on the mortgage?

Tried that first but they earn less than me on paper due to being them being self employed. Combing my dad's earnings with mine is enough to be accepted as joint applicants though.

cheers_drive

I've googled beneficial ownership and tax and it's just another way of saying joint tenancy or tenants in common. So looks like tenants in common is the way to go.

Radiantsoul

One risk is if you default then your parents may lose any of their assets if you default.

If I were you I would probably look to remortgage at some point and remove your parents from the mortgage asap. The solicitor ought to advise your parents if they should take legal advise, my theory is that they probably ought to as from a legal point of view it would seem you have what is called undue influence over them. This means it is probably not a contract a person would willingly enter into at arms length with a stranger.

cheers_drive

Radientsoul - that is the intention, this is only a short term measure for 5 years max. By then I hope I will either be able to take it on by myself or with my new partner (we've not been together long enough to take that step).
I agree that is a risk if I default, it's no different to be a guarantor though.

Radiantsoul

Yeah it is basically the same as being a guarantor. It is a shame you can't go down this route as it is a bit simplier, and the whole beneficial interest thing might take a bit of setting up. A guarantee is far easier and cheaper.

Fire_Fox

What are your plans if you get made redundant, fall ill or injured and cannot work? Do you have money set aside to pay the mortgage in case of emergency or for ongoing repairs and maintenance? Will you be able to claim Support for Mortgage Interest with your parents on the mortgage? If you cannot afford this mortgage 'on paper' how can you afford it in real life, are you fiddling your taxes?

cheers_drive

If you cannot afford this mortgage 'on paper' how can you afford it in real life, are you fiddling your taxes?

I can afford the mortgage - I've done my sums and I can afford it all the way up to 9% interest and 12% with a lodger. Above that my parents would need to help. My new partner is living with me and paying market rent, if the mortgage company allowed this to be counted as an income then I would be able to afford the mortgage on my own.
Your point about support for mortgage intesrest is a good one.