Remortgage with Partner HELP!

Diplomat365

Hello I am in something of a pickle and looking for the advice of you financial guru's out there. Here's the situation...

I have a mortgage on my home that is attracting a rather poor 4.95 interest rate after Skipton hiked their SVR. The mortgage is for £305,000 making the costs high.

I want to remortgage to a much better rate (around 3%) saving me hundreds a month. However the original mortage is solely in my name and now due to new lending requirements I need to add my wife to get the size of mortgage we need.

I have been advised that a remortgage where a partner is added atracts stamp duty. I've heard two stories on this:

1) The whole value of the house is liable for stamp duty
2) The percentage of the hosue the wife is allocated in the mortgage is liable for stamp duty

Another aspect is I've heard its the remortgage amount not the hosue value that is subject to stamp duty.

Now obviously we don't want to spend a bucket of cash to remortgage. So I need some solid advice on what the situation is, please help.

Senior_Paper_Monitor

Not complicated ....

Getting married, entering a civil partnership or setting up home together


SDLT may be payable when a share in a property is transferred to a husband, wife or partner when they either:

• get married or enter into a civil partnership or
• move in together

SDLT is payable if the consideration given in exchange for the transfer of the share is more than the current SDLT threshold for the property type.

The consideration can include:

• cash payments
• the value of any outstanding mortgage that the partner acquiring part of the property takes over

Example 1 (no SDLT payable)

A house is valued at £180,000. Jane Brown is the owner of the property and has equity of £90,000 and an outstanding mortgage of £90,000. Jane transfers a half share of the property to her partner John Smith.

John Smith:

• pays cash for half of the equity - £45,000
• takes responsibility for 50% of the outstanding mortgage - £45,000

So the consideration for SDLT purposes is £90,000, made up of:

• the cash payment of £45,000
• the 50% share of the outstanding mortgage - £45,000

Because £90,000 is below the current SDLT threshold there is no tax to pay. But HMRC must still be notified of the transaction on an SDLT return.

Example 2 (SDLT payable even though no money changes hands)

Richard King is the owner of a property valued at £500,000. The equity amounts to £100,000 and there is an outstanding mortgage of £400,000.
Richard transfers half the property to his wife Liz when they marry and in turn she takes on half the mortgage of £200,000.
SDLT is charged on the amount paid for a property or the amount of 'consideration' given. By taking liability for the mortgage Liz has given 'consideration' of £200,000 for her share of the property and so SDLT is charged on that amount.
The amount of the equity is not included in the calculation as SDLT is only charged on the consideration given.
SDLT is charged at 1% on £200,000 so Liz will pay £2,000 SDLT and notify HMRC of the transfer by completing an SDLT return.

If the transfer is a gift

If the transfer is a gift and no consideration in money or money’s worth is given then SDLT does not normally apply. Read the section below on ‘Receiving land or property as a gift or from a will’.




Rather than me filling the thread with more examples - if you need more info:

http://www.hmrc.gov.uk/sdlt/calculate/transfer-ownership.htm

Diplomat365

I think I understood that, so in our example:

The house is worth £380k, we have a mortgage for £305k giving an equity of £75k. By trasnferring half the mortgage (consideration) she would receive £152.5k making us liable for stamp duty at 1% or £1,520 as it's otherwise known.

Am I reading this right, sorry if I'm slow had a hell of a day...

...started with someone at HSBC telling me it would cost me 3% on the whole house

Diplomat365

So if the above is correct if we went into unequal tenancy, still allowing her salary to be counted for the mortgage at say 60 - 40 we would move ourselves out of SDLT and save the money.

I honestly don't mind paying tax when its due but I've already payed a bucket load on this house I'm not happy. I can see why its done to avoid sales of houses that attract no stamp but seriosuly this is the wife.