Gifting house with outstanding mortgage

Jo67_2

Hi can anyone tell me if a person can gift their share of their house to their children with £10k still owing on the mortgage or does it have to be paid off?

getmore4less

Who owns the other share?

How old are the kids (under 18 or over)

Jo67_2

the persons ex/the childrens mother owns the other share

Jo67_2

Kids are over 18 but he wouldnt want to transfer the debt to them.

DVardysShadow

It is an odd one. AFAICS, yes, he can give the house to his children with the mortgage in place, but if the mortgage is not paid, it will be repo'd in the ordinary way. Normally houses do not sell with the mortgage in place, because your conveyancer will protect you from having the house repo'd from under you for a default on someone else's mortgage.

He needs to think about how he will pay it off - or if the children must do this, then they should take out their own mortgage.

opinions4u

DVardysShadow wrote: »

It is an odd one. AFAICS, yes, he can give the house to his children with the mortgage in place, but if the mortgage is not paid, it will be repo'd in the ordinary way.

Surely the lender would have to consent to this - charging fees along the way.

DVardysShadow

opinions4u wrote: »

Surely the lender would have to consent to this - charging fees along the way.

I don't think so. I think you could just do it - the lender is protected by their security on the property and could still repo - it is for this reason that in a purchase the solicitor will make sure that the charge is satisfied, so you only rarely see it happen. Generally when lenders prevent a sale - perhaps due to negative equity, the device they use is, I think, refusing to lift the charge on the property - at which the buyer's lender calls a halt.

getmore4less

If over 18 that means they can actualy own the property if under it would have needed to be a trust.

Another potential issue is how many children I think the limit on owners is 4 for property so if more than 3 kids there may be an issue.

Other things to look at are who lives there are there any conditions on them living there that would need to transfer with the ownership.

The transfer will trigger a potential CGT charge.

If the house is owned by 2 people are they both responsible for the debt.


Always a good idea to check why it is being looked at, often people think things are a good idea based on the wrong assumptions.

Ithink thee will be an issue with transfering ownership with the mortgage since lenders like the mortgage holder to be the owner or at least part owner.