Swapping house with parent - is this possible?

mumoftwo30

Hello,

My mother in law has offered to swap houses with my husband and I. She said she wants us to have our inheritance now rather than when she dies as she is keen to get us out of negative equity (we bought our house in 2007 - worst decision ever!). She is widowed and living in a big house which she is finding too hard to maintain. We have two children and are stuck in a small house which we are seriously outgrowing.

She has no mortgage and we believe that her house may be valued at around £150k, although we need to get a valuation done. We also need to get our house valued, but houses on our street are currently for sale for between £50 and £60k. We paid £140k for our house - we still have a mortgage of £126k.

Do you know if it will be possible for us to take the mortgage with us to my mother in law's house? Or will the banks be able to refuse to let us do this?

holly_hobby

You can't transfer a mortgage between properties.

A new property equals a new mortgage based on your current status and finanical circs.

Hope this helps

Holly

bigadaj

It might be possible but as holly says you'd need to apply for a mortgage on the mil house, and then use this to pay off the current mortgage.

Assume your mil doesn't have substantial other assets so inheritance tax won't be an issue, however deprivation of assets might be an issue if she needs to get local authority help at some point.

Are you sure about the valuations on your current house, you may have bought at the peak of the market but more than halving in value sounds excessive, average reduction would probably be around a third?

mumoftwo30

Yes I am sure about the valuations on our house - we live in Northern Ireland, which has been particularly badly hit by the falling house prices. *sob*

Thanks Holly.

bigadaj

Fair enough, I'm aware of te problems there and good luck. Re ember that a larger house will also come with more costs, from higher council tax to heating etc so make sure you budget for these.

Thrugelmir

You MIL could sell her house. Then gift you the money to repay your mortgage and buy the property herself.

Then you would be debt free. To start again.

kidmugsy

Are there particular features of the two houses that are important to you, or do you and she just want to arrange that she ends up in a smaller one and you in a larger?

mumoftwo30

Yes there are features of both houses that make us want to swap, as opposed to her selling her house.

getmore4less

How close are they to each other. It is not unknown for people to just swap.

With £66k of debt have you looked at other options.

antrobus

mumoftwo30 wrote: »

...Do you know if it will be possible for us to take the mortgage with us to my mother in law's house? Or will the banks be able to refuse to let us do this?

As has been said, you can't technically transfer a mortgage between properties, but you sure can repay the mortgage on the old property with a mortgage on the new property, effectively achieving the same result.

Put the proposal to your current mortgage lender and see what they say. If it was me making the decisions, and I had a customer who was offering £150k security for a £126k loan, in replacement for £50k security, I'd bite your &*%$£ hand off.

mumoftwo30

getmore4less - the houses are a 5 minute drive apart. But none of us would be keen to 'just swap' without going through the procedures to make it official. Yes we have tried to come up with other solutions but short of winning the lottery we cannot see how to get out of this situation with the sheer amount of negative equity.

Antrobus - thanks. It sounds like we will just have to ask the bank and pray that they agree to let us take out a new mortgage. The thing is, we are both in good jobs and could afford to be paying a bigger mortgage now had we been in a position to sell up (online mortgage calculators are telling me we could borrow over 200k). So I can't see any logical reason why we would be refused to do this.