Joint ownership -> Single Ownership

jimladin

Hi,

recently I have been given a slight shock from my parents and was hoping that some of the experts could give me some advice.

Approximately three years ago I moved out of my parents house and bought a flat of my own. At the time I was still a trainee and therefore was earning a fraction of what I do now (thankfully!). My parents very kindly agreed to give me 50% of the mortgage value as a deposit so that the bank would agree to lend me the other 50%. Both my mum's name and mine are on the mortgage and title deeds.

It was agreed that, when I came to sell the flat, we would split any gains and that would be fine.

The problem is, after 3 years, they need the money back and i don't really want to move out of my flat and look for another place. They have given me a years notice which isn't so bad.

Currently i could afford to pay for a 100% mortgage. But, I have no idea what the situation with the lenders is.

If I am to stay on at the flat, how simple is it to remove my mum's name from the mortgage (and title deeds)?

And how will i actually give my parents the money? Surely I would need to release some equity from the flat?

Argh, it's all so complicated. I hope that someone can offer some advice.

THanks for reading

jennifernil

That is a pity. Are there any repayment penalties on your present mortgage? If not, or maybe even if there are, if you do not want to sell then you will need to remortgage the flat, or increase your loan from your present lender, going for the best deal you can find on interest rates. This would give you enough to repay your parents their original investment, possibly even enough to give them their share of any increase in the value.
How would you ascertain that increase? The only true way is by selling the flat. You could get a professional valuation if you were all agreed to accept that, or you could agree a % increase based on the interest they have lost by not having the capital in the bank.
Was this scenario of wanting the money back never discussed? If not then that was a bit of an oversight. However these things do happen so I suggest you discuss with them what is the best plan.
If it is not something you have done to make them change their minds then I would push for the capital plus interest option!

Rick62

Removing your mothers name is known as a 'transfer of equity' it is reasonably straightforward requiring a lawyer and a few hundred pounds.

You will need to increase the mortgage to raise the money for your parents. i.e. Say the flat is worth £100k, current mortgage £50k, you remortgage to £100k and give the extra money to your parents.

Speak first to your current lender, explain the situation and see if they will do the size mortgage that you require. If not (or to check out if there are better rates) speak to a broker.

herbiesjp

So you have had 3 years worth of propert value increases (hopefully) and your income has increased also.

You do not put any actual figures so it is difficult to say if it would work for you.

However the general idea, is indeed how you state it. You would need to take your mothe roff the deeds/mortgage via a transfer of equity.

You would approach your current lender first to see what your current deal is i.e. are you tied in for a certain period. If you are not tied in you could try to borrow the extra amount and add on to the original amount all on the same rate. BEfore going ahead with this route you would need to compare with other deals on the market

If you are tied in, you would need to borrow the extra amount on a deal that would allow you to combine the amounts further down the line i.e. a deal with no penalties, as if you took out a deal with a totally different end date to the first scheme you would be tied up with that lender or have to pay penalties, if you wanted to find a better deal

If you find a deal which includes free legal fees, please remeber that this will not include the transfer of equity costs, and will have to be paid seperately

I think having a word with a whole of market mortgage adviser would also help in this scenario

HTH