Can my partner buy half of my house?

Greenteanlemon

This has been solved

Thanks

holly_hobby

You can not sell "half" your property to an independent party.

What you would in fact be doing is effectively adding a name to the mge/deeds - which is called a transfer of equity (TOE) in respect of your partner - his addition will be subject to normal lender status checks. He then becomes a joint owner with you (equity may be split if effected as tenants in common as oppossed to joint tenants), but eitherway you will be both jointly and severally liabile for the mge debt and repayment.

Although your partner won't be able to secure an independent mge on his half if you will, as part of the TOE you may as a joint application & with jnt income, wish to consider apply for a remortgage (release of equity and subject to status) to repay some or all of your parents deposit as your require. This will obviously be subject to property valuation, max LTV & remortgage criteria.

This equity release & TOE may be effected with the current or a new lender (take care to check any early redemption penalties with your current provider)

The issue is you say that your parents "gifted" you half the pch price, but that you effectively owe them this, which means, in the eyes of the lender, that it wasn't a gift in first place.

Notwithstanding the TOE issue, you may have a problem with the purpose of remortgage - your parents would/should have had to sign a declaration that their contribution was a gift without reservation (i.e did not require repayment or was not made in exchange for an interest in the property), so your effective reason for remortgage of being reqd to repay back your parents their "loaned" deposit - means that the lender will consider your original mge application to be lets say "untruthful" i.e cited parents gifted (without reservation) deposit, which appears to have not been a gift at all, but in reality a loan requiring future repayment by the Donee - so be v careful on how you approach this.

Hope this helps

Holly

macman

Do you intend to own the property between you as joint tenants or tenants in kind?

Greenteanlemon

Holly, thank you. That was really helpful.

Thrugelmir

Do your parents need to be paid a lump sum or would regular installments suffice?

The purpose of the remortgage would be questioned.

Greenteanlemon

A lump sum would be ideal.

Thrugelmir

vickylouise87 wrote: »

Would it not be suffice to say that I am gifting the cash to a family member in financial difficulty? And are the banks likely to refuse a mortgage if they don't feel this is sufficient reason?

A mortgage primarily is to facilitate the purchase of a property. Not to provide cheap finance through equity withdrawl. Hence the relatively low rate of interest. So a lender particularly in these more difficult trading conditions will be seeking to maximise profit.

Wouldn't the easiest way to address the situation to effect a TOE as Holly suggested. Put the mortgage into joint names. Then repay your parents an amount every month from your joint finances. Perhaps the difference between what a mortgage would have cost and your actual outgoing.

If your parents have no need of the lump sum. Why incur unnecessary interest charges?

CLAPTON

it would seem to me that a transfer of equity without a release of equity would be unwise

he would then own half the house without having put any money into it; if you parted then he would own half the house with very little input.

holly_hobby

vickylouise87 wrote: »

Holly, thank you. That was really helpful.

So theoretically I could add his name on to the deeds without his actually paying anything? And in order to get half the money, will he need a separate deposit of his own, or will the money I have put down and paid off so far also contribute - In the same way as if we were buying a brand new house together?

In essence thats correct, as he can't effectively secure an independent mortgage on effectively 50% of the propety.

What you could, as suggested in my earlier post, is to at the same time as effecting the TOE release equity (subject to status) sufficient to partly or wholly repay the "gift" of your parents.

Of course, as also explained in my initial post, being both party to the mge means that YOU are also wholly liabile for the extra equity released, which in effect is allowing him to "buy in". And this is regardless of how you may split the equity on a tenants in common deed.

Lets say you add him, and then he wants out, the mge lender will only allow him to be released for the mge debt and deeds if your income is sufficient to service the entire borrowings. If they don't, the lender will refuse to release him and you are stuck.

SO THINK V CAREFULLY ABOUT WHAT YOU ARE DOING (especially if Mum & Dad are not the ones pushing for this) !!!

vickylouise87 wrote: »

I will indeed be very careful with regards to how we approach the bank with this. I was planning on simply telling them that I need the cash for other personal purposes. People remortgage their houses all the time for these sorts of reasons - is that likely to cause any problems?

Ok, will firstly you can't just say you want it for "personal reasons" - the lender has a duty of care to establish what the requirement is for (as they do for all remortgages no matter how low the LTV may be).

If as I said in my first post, you state its to repay Mum & Dad their loaned deposit, you again are causing problems - but I also can't endorse a fabricated reason either.

Lots of people take a remortgage for a new kitchen, car, home imps - and dependant upon the amount of equity released, the lender may ask for a supporting quote or estimate from a builder or copy of costings for kitchen refit etc ... In a lot of cases the lender will not seek proof post completion that the funds were actually used for that purpose - but THEY RESERVE THE RIGHT TO DO SO - so if you till a fib or 2 be prepared for the possible fallout if the lender later seeks verification of the use of funds.

vickylouise87 wrote: »

And Macman, ideally I would prefer to be tenants in common, but I wouldn't object to joint tenants if it made the situation any less complex.

Having the deeds written as joint tenants or tenants in common will cause no extra complications - your Solicitor will handle this apsect of the TOE.

But I must again make clear,that no matter whatever the deeds show as the % split of the property, you are both jointly and severally liabile for all mge repayments.

If you really want my advice ... why not just have the BF move in and contribute to the household costs etc, and as Thurls. also suggests put away an amount each month/give to Mum & Dad to repay them/assist with your younger sisters hse pch pot.

Please do think carefully about this whole proposition before jumping in with both feet .... why not talk it over with Mum & Dad first ?

Hope this helps

Holly

Greenteanlemon

Holly, thank you so very much, you have just been so helpful. :j

holly_hobby

Pleasure VL ... just make sure you carefully think adding BF & increasing mortgage (especially if there is no immediate requirement) - just a quick trawl through the posts on here will show how many there are with peeps having probs in having an ex-partner removed.

I'm sure your parents will also want you to protect your interests too.

I wish you well

H x