take off mortgage?

sayahu

Hi,

About 4 1/2years ago my brother bought his prperty in my name as I was earning more then him and could get the place he wanted.

He paid for the deposit and makes the monthly payments through his account (The mortgage broker confirmed all this at the time).

He is eager to get the mortgage on his name, I am very eager to get it off my name (I already have my own place and he can be late with his payments sometimes).

The problem is that he has a very good rate at the moment, he earns about £16000 /£17000 and because of small kids he now has no savings.

The mortgage comany has told me that I can not simply add him on the policy as it would need to be a remortgage but then the rate would be alot higher, as I am now a stay at home mum with two little ones I can't see them giving me a mortgage.

Is there any other way we can do this without too big a cost to me?

Thankyou for all help

getmore4less

You have got yourself in a right mess.

you own a house with a mortgage but don't live there

That will involve potential capital gains tax when you sell it or transfer it to your brother.

FraudBuster

Was full disclosure made to the mortgage lender?

holly_hobby

Getmore is spot on ... what a wholly mess - your broker should be ashamed of himself if he didn't explain any of the complications of an arrangement like this !!

If the property is transferred to your brother - you are liable for CGT on any gain the asset has achieved during the time you have held it (less your annual cgt allowance). This is becuase the property has never been your main residence.

You have also technically breached your mortgage contract (with apparently your brokers encouragement), as you purchased the property as your main residence, but have instead not lived there and allowed your brother to reside there instead - technically you needed to have the lenders permission for this, as in essence you have been letting the property to your brother for the value of the mortgage.

The only saving grace would be if the property has gained little to nothing in market value from the date of purchase, which together with applying your cgt annual allowance (or whatever is left of it), you may end up with little to no cgt bill to pay.

Any cgt liability will be paid on your self assessment annual submission, if you don't already self assess, you shall need to register.

Adding your brother to the mge/deeds and removing yourself is not a remortgage but a transfer of equity.

You need some professional face to face advice on this.

Hope you get it sorted ...

Holly

Thrugelmir

holly_hobby wrote: »

Getmore is spot on ... what a wholly mess - your broker should be ashamed of himself if he didn't explain any of the complications of an arrangement like this !!

An unfortunate reflection of the lack of professionalism in the mortgage broker industry during the credit boom. As all and sundry became same.

PS. Not tarring all with the same brush.

sayahu

Sorry the second mortgage is a buy to let.

My only contact with the mortgage advisor was a phone call at work to confirm that they could take the deposit from my brother in my name.

Thankyou for the advice I am looking into getting someone to deal withit on my behalf the only worry I have is that by sorting myself out I may end up hurting my brothers family. I don't want to make him and his kids homeless, I can not see them getting a mortgage and at a reasonable rate that they are able to afford without high deposit.

Is it likely that even though I pay a reasonable cost he does not have to suffer and still keep his house?

And as to having lived there, we did but only for seven months while our place was being fixe

CLAPTON

very confusing

how much was the buying price
how much is it worth now

are you trying to remortgage with a joint mortgage or is he trying to get a mortgage on his own?

holly_hobby

sayahu wrote: »

Sorry the second mortgage is a buy to let.


And as to having lived there, we did but only for seven months while our place was being fixe

Right, if the 2nd property was at any time before disposal, your main residence (you may have to prove this), then the rules regarding your cgt liability will greatly change - and your liability reduced. I won't go into it here so keep the post simple, but its not complex and your adviser will be able to assist your with this.

With regards to your brother, its a tricky one, but your own needs must come first.

Holly

Thrugelmir

sayahu wrote: »

Sorry the second mortgage is a buy to let.

If your brother is paying the mortgage on your behalf. Then technically you are receiving rent and should be declaring same to the HMRC.

PasturesNew

Thank goodness at least nobody's claiming benefits or that'd REALLY make it complex/fraudulent/dodgy and dangerous.

But is one of you does lose their job, this could really put the cat among the pigeons.

sayahu

The prpoerty was around 148 I think, He has not had it vauled again.

Yes being self-employed HMRC get told of any money coming in on my name (including his payment of the mortgage), I do not include the cost of repairs or what ever in the deductions as that's not my expenses.

As to making claims we both do but that is on child benefit and WTC only (I'm sure that's not wrong - or is it?).

If he was on his own I wouldn't worry so much but as he has 3 toddlers and a wife.... his needs are pretty important to me. It was my mistake as I said yes in the first place not his. He was a 20year old taken in by the advisor and did what was suggested to him.

Thankyou all for trying to show me the way out of this mess .