Parents own house and willing to pass on

billchecker1

Hi,

My parents own their own house, having paid off the mortgage sometime ago. I have recently sold my onw house and have the equity saved and ready for a new house.

We are living with my parents which is allowing me to save quite a bit a month.

We wish to get a large neough house for us to start a family and have the deposit to go for a 90% LTV mortgage on the price of house we want to get.

We may be able to get to 85% in the next 6 months or so.

My Dad, knowing that it is hard to get a mortgage has offered to pass me his house into my name.

Would this then help me during application time?

Just to clarify I have a good credit history with no defaults. The wife on the other hand has around 6 from 2+ years ago (mainly due to simply forgetting to pay the paper bills grr!).

Thrugelmir

billchecker1 wrote: »

My Dad, knowing that it is hard to get a mortgage has offered to pass me his house into my name.

Where are your parents intending to live?

holly_hobby

If you are linked with her with the CRAs, her (fairly recent) adverse credit will affect you regardless.

Your parents effecting a transfer of equity of their unencumbered property, into your name will not cancel out your wife's adverse - or to be fair will it affect your affordability calcs or status, unless you of course seek to release equity from it via a remortgage at a later date (6 mths min).

From your parents point of view, if they effect the TOE (although hard to see what the benefit, as it won't clean up your/your wifes credit history), and then seek any state assisted long term care, this will be classed as a deprevation of assets, and if there is IHT exposure of their estate, this will be a gift with reservation, so PET regs are completely suspended until their vacation (and not relevant on death and administration of their estate, if this occurs first).

Hope this helps

Holly

kidmugsy

billchecker1 wrote: »

Hi,


My Dad, knowing that it is hard to get a mortgage has offered to pass me his house into my name.

Look, it's best not to use vague expressions like "pass into my name". Do you mean that your father proposes to make a gift of his house to you?

If so, tell him how grateful you are but refuse the offer. It could do him and your mother dreadful harm while doing you no good at all.

billchecker1

Thankyou all for the constructive replies.

Yes they would be staying in the house and no it is not subject to IHT.

I dont seek to release equity from it, certainly not whilst my parents are around and the thought never entered my head.

Without knowing too much about the law I had simply assumed that having an asset such as a house, albeit not earning me any money, would actually increase my attractiveness to lenders.

After all they go through everything with a fine tooth comb should the worst occur so surely having this would help.

holly_hobby

billchecker1 wrote: »

Without knowing too much about the law I had simply assumed that having an asset such as a house, albeit not earning me any money, would actually increase my attractiveness to lenders.

After all they go through everything with a fine tooth comb should the worst occur so surely having this would help.

No it won't help, because even if you are a legal owner, it won't be used as security for a further residential mge.

However, the issues it may create for your parents are ten fold.

Hope this helps

Holly