Selling house with secured loan

louie31

Can anyone advise how this works?

We (me and husband) have bought parents home, mortgage is 55000 and secured loan is 8000.

Does there be an early settlement deal with mortgage and loan?

We are going to be selling to a family member for £80000 (cash sale) house is valued at around 90000-95000.

How does this work with a secured loan and stamp duty?

We are going to clear all credit cards etc.

Then we are hoping to buy a new family home, we dont have the greatest credit history and know we may have to wait a few years to rebuild our credit.

Will probably get a mortgage broker to help us get us up and running and solicitor to deal with sale of house.

Any advise would me muchly appreciated

silvercar

The mortgage and secured loan are cleared from the proceeds of the sale.

No stamp duty as it is under the stamp duty threshold.

louie31

Thanks silvercar

I take it our solicitor will do all this for us! and just give us the balance

Cannon_Fodder

Have you fully purchased from the parents, or are their names still on the deeds ?

How much goes to you/husband and how much goes to the parents ?

If you get it all, that clears the £63k and leaves you £17k towards costs, credit cards and other debts.

Stamp Duty doesn't apply until £125k.

The parents need to consult their own solicitor, to ensure they have security of tenure. As well as you and the family member getting your/their own, too.

Be careful to ensure it doesn't even appear to hint at breaching any deprivation of assets rules, as you/the parents could be put in an awkward financial position in the future.

louie31

The parents are old and still living in the house, their names are on the deeds as well as ours.

But mortgage is paid solely by us and once loan and mortgage cleared money comes to us only. They have never paid any monies towards the mortgage or loan.

They are happy to go ahead with sale and they will still be living in house.

sonastin

Its still worth each of you getting a solicitor to make sure the transaction is processed properly and recorded correctly. Some posters will warn against "keeping it in the family" in case you call fall out but it doesn't even need to be a falling out that could cause the trouble - if the buyer needed to mortgage the property to raise some capital or if your parents were means tested for care when they got older - even a change in the law could throw up difficulties if you don't get this right now.

It is worth spending a few £££ now to save a lot of heartache later

silvercar

louie31 wrote: »

Thanks silvercar

I take it our solicitor will do all this for us! and just give us the balance

Correct.

louie31 wrote: »

The parents are old and still living in the house, their names are on the deeds as well as ours.

But mortgage is paid solely by us and once loan and mortgage cleared money comes to us only. They have never paid any monies towards the mortgage or loan.

They are happy to go ahead with sale and they will still be living in house.

So all 4 of you are selling?

Have you calculated your capital gains tax liability?

Cannon_Fodder

It is quite right that their names should be on the deeds, it gives them protection in respect of their continued residence.

They will need to ensure the same agreement with the 'replacement' family member.

The fact that only you have paid the mortgage is not sufficient to give you 100% of the money.

Named on the deeds and mortgage, the parents technically own part of the house. Which means they should receive at least some of the money from the sale.

If you died tomorrrow, they would probably end up an increased portion of the property by virtue of being "joint tenants" in respect of the deeds, unless they are "tenants in common" and there is a declaration of trust to dictate the portions owned. Which you have not mentioned, so I presume not.

They can offer family discount, and make a personal choice that you receive the money from the sale - or as per a declaration of trust, hopefully. But they should only do so having had professional advice, in order to ensure that if they have to go into a care home in the next few years, the council do not come along and ask you or they for the money to pay for it, from the sale proceeds, because rules have somehow been broken/overlooked.