Mortgage advice

machiavelli27

Hi

I bought a property 2yrs ago. it is now coming up to the end of the tie in. i am currently on a fixed rate at 5.5%. the house is worth 150k and the mortgage is currently 112k. However since buying the house, my parents have signed over their house to me. So in effect i now own a house worth 175k (mortgage free). I was wondering could i secure the equity of both houses (175k + 38K) onto my mortgage, so i can get a low, low mortgage?

Thanks

getmore4less

I bought a property 2yrs ago. it is now coming up to the end of the tie in. i am currently on a fixed rate at 5.5%


Whats the follow on rate


What are you doing with the other house?

If the parent are still living their why have they signed it over to you? this is frought with potential problems.

GMS

machiavelli27 wrote: »

Hi

I bought a property 2yrs ago. it is now coming up to the end of the tie in. i am currently on a fixed rate at 5.5%. the house is worth 150k and the mortgage is currently 112k. However since buying the house, my parents have signed over their house to me. So in effect i now own a house worth 175k (mortgage free). I was wondering could i secure the equity of both houses (175k + 38K) onto my mortgage, so i can get a low, low mortgage?

Thanks

Remortgaging the unencumbered property to pay off the mortgage of 112k would mean an LTV of around 65% which should mean a decent rate. This would leave the current property mortgage free.

Issue you may have is that you do not reside in the other property. Who lives there now?

machiavelli27

My parents still live in the house. the standard follow on rate is about 3.5-4%. the way i was thinking about this, and i dont know if it works, was the whole point of higher interest rate is about risk and the bank risk of getting their money back if things go badly. However if i secured 2 houses onto the mortgage one worth more than the mortgage, then the risk of the bank not getting their money is reduced and hopefully the interest rate for my current home would be reduced. (if you follow my logic)

getmore4less

My parents still live in the house

are they paying rent?

Look up gift with reservations.

heres a start
http://www.hmrc.gov.uk/manuals/ihtmanual/ihtm04071.htm

Problem is you also have CGT issues on top of this.

pre-owned asset tax might also apply or be an alternative.


Was any advice taken?