House swap with father in law

ryan381

This is really why I am posting as it's a bit confusing...

so the way I see it is that we have £30k in our property so can that be classed as a deposit, but surely the fact that the mortgage company has a valuation of £250k then is that not the deposit the difference in the valuation an buying price? i.e the equity

fawd1

ryan381 wrote: »

my wife and I take out a new mortgage or port with our existing lender and buy my FIL's place for £150k.....that cash is then transfered to my FIL solicitor as he doesn't have a mortgage company and they then pay the payment back to our lender to clear the mortgage on our property mortgage?

Just to check, the FIL property currently stands at £250k, yes? But you would have £30k deposit from the sale of your property and then 70k equity that your FIL is gifting to you.
So you would have two options I would think. He can either sign over 70k equity (whatever percentage of the property that is) You then get a mortgage for the shortfall, after your 30k is in, effectively buying him out. OR, he reduces asking price by 70k, so you can afford it outright. I can't see why that wouldn't work, but you'd have to contact a solicitor and your bank to see which would get you the best deal. I would think that a lower LTV rate would mean a better deal, but maybe not.

Alternatively, how long do you have left on your mortgage? Could you not just move? If you're not letting the property to your FIL (i.e) charging rent, then are there any rules to say you have to live there?

Another alternative, get your FIL to sign house over to you, remortgage for 150k, and pay back mortgage on your own place. Maybe it could work?

ryan381

What we want to do is buy my FIL house for £150k, its valued at £250k so he is reducing the cost already.

We then want to just port our mortgage to buy his property at £150k
or
We want to take out a new deal i.e a moving house with the same lender

Our fixed rate has ran out and we have our mortgage over 23 years

So just wondering how the above works and how does my FIL acquire our house and how is it best to play the £30k

If we bought his for £150k and then that money went to his solicitors and he buys ours for £150k with that money then is that not it? So basically if we sold our properties down the line at the same values at todays valuations we would have £100k equity and he would have £30k equity (sorry £180k as he has no mortgage)

OR

We buy his for £180k using £150k mortgage and £30k in our property which goes to his solicitors and he buys our outright at £180k

We you a deposit as the £70k equity already in the property

ryan381

Called my mortgage lender and waiting on a branch call back but via the phone they didnt see an issue we would basically port our mortgage to my FIL property and that is it, and he would basically acquire our property through solicitors i.e title deeds

Once the mortgage is ported we can seek a new deal as the equity would be 100k

kingstreet

ryan381 wrote: »

This is really why I am posting as it's a bit confusing...

so the way I see it is that we have £30k in our property so can that be classed as a deposit, but surely the fact that the mortgage company has a valuation of £250k then is that not the deposit the difference in the valuation an buying price? i.e the equity

If you do not have this treated as a family purchase at undervalue and make sure the lender is happy with that, then no, the difference won't be allowed.

Mortgage lenders use the lower of purchase price, or value, so if you try to do this like a "normal" transaction, they'll assume you are buying for £150k and want to know what deposit you have.

Typing while you were posting - fine, if now sorted.

ryan381

I'll update again once the branch calls me

But basically it seems ok to just port my mortgage to my father in laws then take out a new deal once moved in so house will be valued at 250k and my mortgage would be 150k outstanding.

The deeds will then be transfered into my father in laws name for my property

The solicitors quotes are treating this as buying and selling normal fee's and stamp duty

ryan381

So my mortgage lender is ok with the set up actually said it simple enough....basically we port our mortgage and then we can take a new fixed deal out against the equity in the new property.

Solicitors seem to know what to do, and its just standard buying and selling fees, and looks like stamp duty will be at 150k which is a wee bouns as that will be the actual purchase price.

If anyone has actually done this I would love to hear from you

Thanks