Buying one half of a mortgage free house?

craigk25

Hi all,

hoping for some advice.

long story short myself and my partner were looking to buy a house unfortunatley we were unable to secure the mortgage we needed. she still has the oppotunity to buy this house with her brother (mortgage free). with her and her brother being on the title deeds. (i would have no ownership of the house)


In the future
Her brother is looking to move away and would like to sell the house (2/3 years). I wish to buy the property at this time however this would require a mortgage. Is it possible for me to get a mortgage with my partner to buy the equity her brother owns without having to pay stamp duty / tax?

or are their alternatives to get around this?

Thanks for your comments

jwil

Hi Craig,

My husband and I have just done this. He owned a property with his brother (no mortgage), and we bought him out. It is called transfer of equity. We went through a mortgage broker in the same way as you normally would, and they class it as a remortgage. We had to pay additional solicitors fees as it was not a standard purchase, but otherwise it was straightforward, and took about 3 weeks from the time we received the mortgage offer.

As long as the amount you are paying your partner's brother is less than the stamp duty threshold, you won't have to pay it.

HTH Jwil

phlash

In response to jwil...

It is easy to 'do' as you have pointed out, but its not so easy to get it 'right'.

There is a way around stamp duty.....if her brother gifts you the share of the house. i.e. You pay nothing for it, but I doubt thats going to be a reasonable solution.
http://www.hmrc.gov.uk/sdlt/transaction/transfer-ownership.htm

Her brother would pay CGT on sale of his share of the property, there would be no PPR relief.
http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/TaxOnPropertyAndRentalIncome/DG_4020890

You may want to think about how the property is owned...
1) Tenancy in common
2) Joint tenants
They are very different, and I suggest you probably want option 1, but most people I believe would end up with option 2 if they didn't think about it.
http://www.elderlawanswers.com/resources/article.asp?id=5842&section=4

Ciao

Phlash