Equity

Ottosump_2

Hello Group, I helped my mother purchase her home 5 years ago using the council right to buy scheme. As she was a pensioner I acted as the gaurantee. My mother now requires smaller accomadation and is looking at a council run bungalow. I have paid all the mortgage payments since purchase from my bank and there is about £13,500 existing on the mortgage. As I am the only child my mother wants to give me the house, (which has been the idea from the start, as an investment for my 3 children). What I need is any information, regarding transfering the mortgage and owner details into my name, I have approached a solicitor who very kindly provided me with an inflated estimate of over £750 for the transfer of equity, but when I contacted the mortage company I was informed that I would have to re-mortgage the home. I don't understand, if my mother is giving the home as a gift why would I need to re-mortgage. And if I have to, what is the easiest way to achieve this. I am a complete newby and would appreciate any information.
Regards
Otto in overcast Cumbria

homer_j_3

The reason a remortgage will be required is that a transfer of equity is only applicable where you want to remove a party from a mortgage or add/replace a party to the mortgage. You have to keep at least one of the original applicants on the mortgage. As you were guarantor, you would not be classed as an applicant in this way.

You will have to do a remortgage in this instance.

silvercar

Is the property market value over £125,000? If so the revenue will expect to be paid stamp duty. A gift between related parties won't exempt you from this. There are also inhertience tax issues to consider and if your mother required to live in care, the local authority may consider that the transfer was done to avoid your mother having to sell the home to fund her care.

Best to read up on these things. Try the age concern websites.

payless

Whilst ( and I'm making an assumption here about other assets) I doubt if IHT would be an issue

I assume you making mortgage payments were a give , and not registered as a loan against your mother's property . She has an asset iuf she gives it away thats her business ( unfortunately in my mind, as this arrangement is partly the cause of the lack of social housing ... which fires buy to lets, in turn increasing house prices... but thats another story) subject to correct legal/ tax arrangements as described above.( its not really even a remortgage , but a transfer + new mortgage, but a lender may cut corners )

She had a council ( or other social landlord property) , and now wants to go back into council ... not a problem if...
1. She meets criteria
2. Pays her own way ( maybe from profits on house)

Ottosump_2

Thankyou for all the replies, just to clear a few details. The house is estimated @ £95-100k. My mother is looking for smaller accomodation due to ill health and not being able to navigate the stairs. In an ideal world I would like to pass the home onto my eldest daughter who is 19 and living in rented accomodation with her partner. I don't want to make a profit from the house, but nor do I want the tax man. I would prefer if my daughter takes up the residence, I will continue paying the mortgage, and when my time has come, the house will be a gift to my three children. I'm not sure what the in/outs are concerned with my mother applying for re-housing via the council, but thanks for the advice, I've got an appoitment on Monday with my mortgage advisor and the local council.
Thanks again for all your help.
Otto, still overcast and damp in Whitehaven, Cumbria