Buying the "in-laws" half of a house

garveym

Hi,

My fiancee and I have recently moved into a house that is owned 50% by her and 50% by her parents. They bought the house for £81,000 (£75,000 for house and £6,000 for some work) 6 years ago and have been renting it out until last month when we moved in.

The mortgage is an interest only mortgage and the approximate value of the property is £75,000 (next door is up for sale at £75,000). It was a 100% mortgage (no deposit).

The "in-laws" have kindly said that they do not want any money from the deal (I would assume there is no equity in the house anyway with the value being the same as when they bought it and the repayments being interest only).

This is potentially my first dabble onto the property ladder and I need to know the process involved in me buying their half of the mortgage if possible.

Is this a case of a transfer of equity or do I need to apply for a mortgage for the value of half of the mortgage (£41,000)? Their mortgage is with Halifax and I bank with them so hopefully that would help things?

I am in full time employment and could afford a mortgage of that value but would struggle to raise a deposit unfortunately.

Any advice is very welcome!

Richard_Webster

Fianc!e (F) and her parents P1 & P2) will have one mortgage with Halifax. Halifax don't recognise half mortgages. All three of them are fully liable as far as Halifax is concerned for the repayments etc on the whole £75K.

I assume that you don't intend any money to change hands in this "deal".

You (U) need to ask Halifax if they will approve a transfer of equity whereby F & P1 & P2 transfer the property to F & U. Halifax would be asked to release P1 & P2 from their obligations under the mortgage in return for you taking them on.

Halifax will want to know that U & F together are earning sufficient to meet their income criteria. They may also be windy about approving the transfer, if the mortgage debt is the same as the value of the house.

silvercar

Is it currently a BTL mortgage? If so then you would also want Halifax to consent to it being moved to a residential status.

Have P1 and P2 ever lived in it as their home? If not then they may have a capital gains tax liability. Though if there has been no gain, there is no tax to pay.

garveym

Sorry for the delay in replying and thanks for your help so far.

It is not a BTL mortgage and has residential status so all good there.

I made a mistake in that the mortage has just two names on it not three, just my fiancee and her father. Neither my OH or her parents have ever lived in the house.

Indeed, we are wanting no money to exchange hands just change the names on the mortgage if possible. We would intend to keep paying it off interest only if possible for the next 12 months or so whilst we renovate and save for our wedding next August.

I called Halifax last night and have an appointment to see a mortgage advisor on Monday so fingers crossed. The lady on the phone said it was called "tramping a mortgage" and is done in branch with all parties there. I've searched for info on tramping a mortgage and have come up fruitless so far! She did say that they basically assess my ability to pay but would not need a deposit.

I'm worried about being turned down as I am in the process of repairing my credit history after being very poor with money through my teens and early 20's. I have 2 defaults and a CCJ on my file. One default will drop off next month and the CCJ will in April next year. The 2nd default is in dispute with British Gas and I hope to have that removed asap.

I only need a mortgage of £45k but will I stand any chance of getting a mortgage, even though a small mortgage, with my present credit file? I do have an Ultimate Reward account and a personal loan from Halifax which were only started in January this year so hopefully they feel I am credit worthy?

Thanks in advance for any advice/opinions

saverbuyer

The house has been rented out and your GF/in laws have never lived there. It’s on a residential mortgage. How does that work?

TinyToes

why dont you just pay your FIL's half of the mortgage for a year and then all defaults and ccj's will be off your file plus the loan will have been established longer.

garveym

Saverbuyer - I asked this very question to my OH last night and she said it was a residential mortgage initially and they then asked Halifax for permission to rent it and paid an extra premium for that. They then changed it back to a residential status this year on Halifax's advise as it would be more cost effective - sounds very strange!

I hope that makes sense but sorry if i sound a little vague but I am on the outside a little here and am hearing it all from my OH who deosnt have a clue about mortgages (even more so than me ).

TinyToes - that is an option of course and in all honesty is probably the best option for now. However, my OH wants this doing ASAP if possible so the name is in our houses and isnt a burden to her parents etc.