Potential Purchase with Existing Residential Mortgage

Hazel_Eyes_Fella

Hi Guys

Any help is much appreciated.

I bought a flat in Jul 2004 on a 5 yr fixed rate residential with my mum as co-owner.

I have now seen another property that I want asap, so my question is:

Is it possible to transfer the initial property mortgage in my sister's name (leaving my mum as co-owner) without incurring any fees with the mortgage company or should I wait for the 5 yr period to elapse before doing this?

Or will I have to SELL it to her at the mkt rate and incur tax etc on it? Can this gain be avoided?

Do I need to tell the IR anything regarding tax implications?

Can I have 2 residential mortgages at the same time?

Also I'd like to perhaps rent the new property in a year or so and sell in the next 6 years, what actions would I need to take to avoid or reduce CGT on the potential rise? And would I have to change my mortgage into a Buy to Let one by law?

silvercar

If I understand you correctly, you have a home with joint ownership / mortgage with you Mum and you want to transfer your half ownership to your sister and buy a new place for yourself.

Lets separate out the issues:

tax: anything that is your principal primary residence is exempt from capital gains tax, so if I've read your situation correctly, there would be no tax to pay. If you buy the new place, live in it then rent it out, you get £40,000 lettings relief and are exempt from CGT for the time it was your PPR plus the last 3 years of ownership - so no worries there for a while! As far as income tax goes, your mortgage interest can be put against your rental income and reduce your liability there.

Mortgage: You will have to check with the mortgage company on this. normally most mortgages are portable, meaning you can move them to the new property. You would have to pay an arrangement fee and survey fee again. In your case, you would also need to ask them to release your Mum from the mortgage - they may accept this depending on whether your earnings & credit can justify the mortgage you require. They will be used to this sort of request from people divorcing, so ask away. Your sister and mother can then get a mortgage on your current home.

In answer to your specific questions. You can have two residential mortgages if you have for example a second home. If you let out a property you need to ask permission of the lender and get appropriate buildings insurance.

regularsaver1

if you are wanting to keep the orginal proprty and mortgage but your mum stay on , you are removed and your sister added. then you will need a solicitor and approval of mortgage company

A_Nice_Englishman

Hazel_Eyes_Fella wrote:

Also I'd like to perhaps rent the new property in a year or so and sell in the next 6 years, what actions would I need to take to avoid or reduce CGT on the potential rise? And would I have to change my mortgage into a Buy to Let one by law?

Do void periods, bad debts, repairs, redecoration, legal fees,insurance, agents fees, costs of evicting bad tenants, possible (likely?) rises in interest rates and possible falls in property values figure in the business plan for your projected property rental business?

Rachman_2

Someone's been buy to letting on a personal mortgage, have they ? Can't believe that would ever happen......