Removing name from deeds/mortgage?

luckydip_3

My brother purchased a house three years ago but as he was a FTB/only been in his job for a few months he could only get a mortgage jointly with my mum. My mum did not pay anything towards the deposit (100K) and has not paid anything towards the mortgage. My mum has her own house (250K) and doesn't want us to pay any inheritance tax in the future.


1) Would there be an issue with inheritance tax in the future even though my mum has not paid anything towards the house?

2) Is there any way my mum can remove her name from the mortgage and deeds?

GB8583GW

Can't be sure of question one I'm afraid, I'm sure someone will have an answer but with regards to question two I recently enquired about having my partner added to my deeds and was quoted in the region of £400 - £500 to have this done as it is essential a solictor takes care of this.
Feel free to correct me if I'm wrong but I'm almost sure that is required so yes she can be removed.

zzzLazyDaisy

The answer to question one is Yes, potentially there may be a problem with Inheritance Tax if the house is in joint names. This is because when she dies, the value of her 'half' will be included in her estate and is likely to take it over IHT level.

Question two doesn't have a straight answer, however. If the only way your brother could get a morgage was to have his mother on the deeds, then taking her off would result in a fresh mortgage application being made, and unless his situation has altered considerably, he would presumably be refused.

There is however a way round the problem (and I am surprised that the solicitor dealing with the purchase did not discuss this with your brother at the time). Instead of owning the property jointly, they could own it as 'tenants in common'. This way the shares of the ownership are stated. So she could have an nominal 5%, say, which would keep her on the title of the property for the purpose of the mortgage, but on death, only 5% of the then value would count towards the estate.

As the IHT threshold is due to rise year on year, this may just keep her estate out of IHT, but even if it did just fall over the line, tax payable is 40% of the amount over the IHT threshold, which hopefully wouldn't be too much.

He really needs to to back to the solicitor who dealt with the purchase and find out exactly how the property has been registered.

jewel22_2

your brother needs to visit his mortgage lender and they will check he can take on the mortgage soley, a solicitor will need to sort out the deeds. not sure about inheritance tax

Bossyboots

Daisy has summed it all up nicely. Hopefully the brother was sent a copy of the register entry after registration so may have the document at home to see how the property has been registered.

The difficulty with what is proposed is that the mortgage company will always prefer to have more than one person to pursue in the event of mortgage default. It is very difficult therefore to persuade mortgagees to remove parties from mortgage documents, even when the parties involved are divorcing couples.

luckydip_3

Thanks for the advice everyone i'll pass it on.

My brother will have to check the ownership but he is pretty sure that it was set up as normal. Is it is too late to set it up as 'tenants in common' now?

Bossyboots

luckydip wrote:

Thanks for the advice everyone i'll pass it on.

My brother will have to check the ownership but he is pretty sure that it was set up as normal. Is it is too late to set it up as 'tenants in common' now?

No, one of them simply needs to write to the other informing them that they are severing the joint tenancy and then file a copy with the land registry. It used to be enough just to be able to prove you had sent the letter but getting a signed copy as acknowledgement of receipt appears to be required now.

regularsaver1

She will need a solicitor to remove her name from mortgage and deeds which of course will charge

also your brother will need to approach mortgage lender for them to agree tro be in his sole name - again they may charge

LucyMay75

Hi All

I need to remove my Ex husband from my deeds and mortgage and I want to add my new partner on instead.
My mortgage is up for renewal in April so my question is can I start to look for a mortgage with my new partner and then transfer mortgages or do I have to remove my ex's name first before I can do that?

Advice would be appreicated!