Transferring a Mortgage between Properties

gw1

I originally posted this question on the Home Buying section of the forum because I thought stamp duty was the main issue, but someone there suggest I repost here.

My question is this:

I currently own my own home (mortgaged)

My GF is going to buy a new home but at present I'm not in a position to move out of mine (for personal reasons not financial reasons). The aim eventually is that I will sell mine and move into GF's house, and at that point we'd like to jointly own the house she is about to buy.

We're considering the possibility of jointly buying the house she is about to buy, but until I sell mine I'd only be able to own a small proportion. In the future I'd give her money so that we'd own half the equity and the mortgage would become joint.
My mortgage is currently with nationwide on their BMR of 2.5% which is not available for new applications, instead the standard rate is 3.99%. Ideally, when I buy some of the new property to take my share to 50%, we'd like to move my current mortgage to the new property and pay off the one my GF is about to take out. Is this likely to be allowed and would it attract stamp duty?

Some figures:

My current property
value: £240,000
mortgage outstanding: £135,000 in my name only

GF's property
Assumed purchase price: £220,000 ( but still in negotiation so could change, changing other numbers slightly)
Mortgage: £150,000
I pay £10,000 cash
GF pays £60,000 cash

When I sell my house I pay her enough to buy up to 50% of equity and mortgage becomes joint.

gw1

Thanks for the reply. I think my mortgage is portable but I'd need to confirm with nationwide. However, is that likely to still apply if I'm only buying into a property (i.e. buying half of it from my GF)? And would it be complicated by me already owning a small percentage of it?
Finally, would I have to pay stamp duty when buying the additional percentage of the new property

Simon_gloster

If you did port 2.5% to that property, your current mortgage will need a rate applied. See your current lender about that.

The % ownership thing is irrespective in the eyes of the lender and solicitor...you are 50/50 owners. How you get to paying the stamp duty is up to you, though most sols will take it out of the proceeds of her sale.

gw1

If the house was worth £220,000 and I was buying half (i.e. £110,000) would that then be exempt from stamp duty because it's lower than the stamp duty threshold, or is the total house value relevant?

(Given that GF would have paid stamp duty on whole amount when originally purchased)

Simon_gloster

Fraid not, its on the total purchase price.

gw1

Simon_gloster wrote: »

Fraid not, its on the total purchase price.

So even though only half the property would be being sold (the current owner retaining ownership of the other half), stamp duty would be still payable on the value of the house rather than the price being paid for the bit being sold?

That seems unfair - but I guess it wouldn't surprise me

Simon_gloster

Now i'm getting confused, either sell all or not. Its not unfair the stamp duty as you have options......buy for <£125k.

Thrugelmir

You will not be able to port existing your mortgage to a property your g/f already owns.

Is your g/f taking out a mortgage in her sole name to acquire the new property? From your post unclear if this was the case.

Simon_gloster

Further to my post #4, you can port your rate to the new home, wha nationwide do with your current home is up to them. If your partner has a mortgage with another lender, you cannot use 2 different providers for the new home. If she has penalties to leave them she will have to pay and lose them.

If your both NW customers, you may be able to port 2 mortgages to your new home.

holly_hobby

" Ideally, when I buy some of the new property to take my share to 50%, we'd like to move my current mortgage to the new property and pay off the one my GF is about to take out. Is this likely to be allowed and would it attract stamp duty? "

I think the way you have worded your problem, has caused some confusion.

My reading is that :-

1. You live in a property with a NWide Mge
2. Your GF is buying a property independently of you
3. At some point in the future, you wish to sell your own home, and become a joint owner with your GF on the property she is about to purchase ....
4. Whilst as a simultanaeous transaction, your GF redeeming her borrowings with her lender, and becoming party to your mortgage as a joint applicant.

Is that correct ??

If so, essentially what you are looking at:-

1 From your GFs point of view this is classed as a remortgage (as she already holds title)

2 Your addition to the title deeds (whether as tenants in common or joint tenants), is a Transfer Of Equity (TOE)

3 You hoping to achieve the above, following the sale of your current home (or agreed consent to let ?). At that point and in connection with your TOE, wishing to retain Nwide & simply "port" your current mge product, from your own sold property to your new home with your GF (who already owns it).

OK if so lets take each issue ....

Firstly...

SDLT

Regarding the transfer of equity between you and GF - you will be exposed to SDLT on your purchased equittible share - not the entire property value, there will be no CGT issues for your GF as this is her primary residence.

Secondly ...

Mortgages & Porting

As explained you can only have 1 residential 1st charge mortgage on a property - which means that as your GF wants to retain legal ownership (albeit at a reduced share), she will need to be party to any mge application you make, and as such it any application will be classed as a remortgage (as we know she already holds title), and of couse she will also have to meet the lenders critera/status checks.

Porting mortgage products only relate to a new purchase of the applicants

So, no .. you would not be able to port your NWide mge if GF is party to the application - as although you will in effect be making a new purchase, she won't - and as she is already the property owner, you are stuffed.

So a new (re)mortgage with a TOE, would have to be sourced, be it with NWide or another provider - if you suffer any ERPs with your current product, NWide may refund these to you if you remain with them .. although this is not a contractual right, and purely discrectionary on the lenders part. (but some lenders are acceptable to this). NB - as the remortgage would involve the TOE (i.e adding you on), you would not qualify for any fee free deals being offered).

The only way to enable you to port (subject to lender agreement and status), would be for you to purchase the property entirely from her (i.e GF not being party to the mge appliation to avoid the rmge issues).

This would redeem her existing mortgage and lenders 1st charge, permitting Nationwide 1st charge, this would be classed as a purchase for you, and as I say this would be on the basis that the lender is permitting the port & you have satisfied their standard criteria and status checks in respect of the total amount of borrowing. (as your application will be treated as a new borrower for uw purposes)

HOWEVER, this WOULD expose you to SDLT on the FULL purchase amount - furthermore you are now 100% title owner, GF having forfeited her own legal ownership if you go this rout - a further issue in going this track is that most lenders don't like the fact of someone selling their property, only to remain resident (if aware of course). And in my opinion, it would have to be an absolutely storming rate, to offset the additional SDLT issues and costs, notwithstanding the issues re ownership between you as discussed above and any ERPs GF may be exposed to.

I can see what you are attempting, and can understand why you would think it perfectly easy, but I hope the above explains what the complexities of the issue really are.

Hope this helps

Holly

gw1

Thrugelmir wrote: »

You will not be able to port existing your mortgage to a property your g/f already owns.

Is your g/f taking out a mortgage in her sole name to acquire the new property? From your post unclear if this was the case.

Yes she will be taking mortgage in her sole name for new property - probably also with nationwide