Property advice, parents swapping their mortgage to me?

krazyk

I'll try and be as concise as possible, but basically my parents who live in Kent, own their own house, they are both on benefits of some sort as neither can work, my mother has now retired (both are 60).

I think the suggestion came up when they spoke to CAB, but what would happen if the mortgage moved over to me (and probably my brother who lives with my parents)? What would be the best way to do this if at all? I don't own my own home but I currently live and work in a rented house in Berkshire. I am, however, looking at buying my own place here and if my parent's mortgage were to be transferred over to me in some way as well as me having my own house how would this affect me and can I then ask for rent from my parents to cover the mortgage repayments and insurance policy?

Would my parents then be able to claim the rent on their benefit (the mortgage is about £320 but the council don't pay £39 each month due to the threshold coming down and interest rates going up)? They have to pay off the mortgage in 5 years (which is not likely as they have not been able to pay the insurance policy, which would have matured in 5 years). If it's not paid then they will have to move. But can they get another mortgage when they are 65 years old?

I have my own limited company (as I work as a contractor). What would happen if I bought a house through the company or my parents mortgage was transfer over to my company?

And how would inheritance tax affect all this?

K

krazyk

Hi again,

Can anyone help me here? :-)

K

flea72

you cant transfer a mortgage from one person to another, you have to get your own mortgage - the other option would be for you to make the repayments for your parents for the final 5yrs of their mortgage, but the only way they can pay you rent to live in it, is if they give up their right to ownership and transfer it to you, so they can then claim housing benefit - but this might be viewed as avoiding inheritance tax too

if you wanted to but them out, you would have to declare that you are having a buy to let mortgage (usually higher interest rate), and depending on how much profit you made rent wise, it would be taxable

you would also need something in writing about ownership of the property - i cant really see your parents or your brother being happy about releasing the house to you, but not retaining any right to ownership - unless you paid them full market value for it - its too hard to work out, who paid what, whos entitled to what, later on iyswim

as for inheritance tax, that shouldnt be a prob, if you are buying the house, rather than being given it

theGrinch

you may be liable for stamp duty tax

krazyk

Hi there,

I think they got a sense from CAB when they spoke to them that a transfer was possible. I will have to check with them. They are happy to sign over owership if neccessary, they really want me on the property ladder and I've been down many, many routes, coming to a brick wall every time.

Also, it was mentioned that the mortgage would need to be transferred 7 years before they die (I cannot remember the reason)?

K

theGrinch

krazyk, what did CAB say re stamp duty?

krazyk

I don't believe it was mentioned. The transffering of the mortgage was not talked about much as when they went (several months ago) it wasn't the purpose they went to see them. It just came up.

K

Poppy9

KrazyK

You are not asking for much, a gifted house, mortgage on it payed by tax payer via benefits. Would you like us to arrange redecoration too


I think there is talk on another thread of gifting property and the avoidance of IHT. You might find some useful information there.

krazyk

LOL, thanks I'll have a seatch.

K

krazyk

Hi Poppy9,

Sorry had a search and it only found this thread, do you have the links?

K

Poppy9

Try this

http://forums.moneysavingexpert.com/showthread.html?t=36000