Parent on mortgage?

kellydobson

Me and hubby currently have a mortgage on our property which is up for sale but just found out we can't sell because nram won't port our mortgage as hubby has not been self-employed for a year yet. My dad said could he be guarantor, now I don't think that will really work if we stick with nram, but what if the mortgage is in mine and my dads name then we change it to hubby when he has a years books?
Does anybody know if this is possible?
Thanks

Thrugelmir

NRAM no longer offer new mortgages. So adding your father may well not be an option.

kingstreet

You're looking for a new mortgage with a different lender and then the loan to value etc will become the big issue.

holly_hobby

kellydobson wrote: »

Me and hubby currently have a mortgage on our property which is up for sale but just found out we can't sell because nram won't port our mortgage as hubby has not been self-employed for a year yet.

Porting relates to the product not the rate - so it would be an entirely new mortgage regardless.

kellydobson wrote: »

My dad said could he be guarantor, now I don't think that will really work if we stick with nram

There are guarator schemes about, but assuming your case is acceptable, Dads income and status will still be assessed as any borrower (and he will need to demonstrate to the lender that he has obtained independent legal advice as to understanding his responsibilities under the arrangement), and baring in mind that guarantors have all the legal risk and responsibility for repaying the mortgage debt (in the event of your default), but none of the benefits, its a lot to ask.

kellydobson wrote: »

but what if the mortgage is in mine and my dads name then we change it to hubby when he has a years books?
Does anybody know if this is possible?
Thanks

Yes its possible, if you were taking dad off and putting hubby on (and staying with the same lender) it would be was referred to as a transfer of equity (circa £500 legal fees & lender fee) - and only possible if your own and hubbys income and status statisfy affordability/criteria of the lender (be it you stick with the lender you have, or you effect a simultantous remortgage to an alternative provider, whom may be more suitable for your needs).

With regards to Dad owning the house with you, as this isn't his primary residence, he will be exposed to capital gains tax on any gain (less permitted exemptions, reliefs, deductions), which will be based on the difference between the acquisition price of your new home, and its MARKET value on tsf to hubby (as the parties are connected). Unless there is an absolute explosion in market values, then I wouldn't worry too much, but you/he needs to be aware of this incase a HMRC return is reqd (ie there is a taxable gain).

If Dad is in reciept of any means tested benefits, or intends to apply for any, then his ownership of the property with you will have to be declared, and will affect his entitlement. Also take note that it will be exposed to his creditors (although only to the extent of his beneficial ownership 50% or lesser if held under a tenants in common arrangment).

Although, if Dads estate is likely to have IHT exposure on death (ie net value exceeding 325k or upto 650k if there is unused spousal exemption available for transfer), then care should be taken to hold the property as joint tenants (with automatic transfer of ownership to you), as even though you only intend to have Dad on for a yr or so, life sadly runs to its own timetable so just consider that..

SDLT - as the TOE is not between spouse's, but between Dad and Hubby, I think (happy to be corrected) that the exercise WILL be exposed to SDLT, if the value of the transferred mortgage exceeds 125k.

However to address this area, you may want to consider (if Hubbys credit status is ok ) - making an application in all 3 of your names, which means you'll all be legal owners from outset, although the affordability assessment tl release Dad will remain unchanged.

So this all needs to be considered.

Your broker and conveyencer will guide.

Hope this helps

Holly x

kellydobson

Thank-you Holly for that in-depth explanation.
We've decided to take our property off the market until next summer when hubby will have a years books, then speak to a mortgage advisor to see if there's anything out there for us.
I think the mortgage with my dad was an option, but probably too much hassle for just a year or so wait.

holly_hobby

Thats fine ... its what I thought you asked for , and would expect a competent adviser/IFA to have discussed with you.

Waiting until you can leave Dad out of the mix, is probably the best for all concerned.

Holly