Transfer mortgage / add name to mortgage

alanor

Hi,

My partner's mother & father bought a flat in July 2012, which my partner & I moved into & effectively we pay the mortgage [rent].

We have all talked about it & we are wondering whether it's possible to transfer the mortgage into my name or add my name to the mortgage (my partner has just turned freelance so she no doubt will not qualify for a mortgage yet)

I have saved a large sum of money that I would like to pay towards the mortgage

The general aim is to lower the monthly payments

Can anyone advise?

Many thanks,

A

Foxy-Stoat_3

Who put down the deposit and does the lender know they rent out the flat to you and your partner?

If you are able to afford the mortgage in the lenders criteria then there wont be a problem. Its called a "Transfer of Equity", minimumal mortgage fees, legals will be around £1000.

alanor

Thanks Foxy-Stoat,

My partner's parents put down the deposit

The mortgage was given to them on the basis that it is a ''second family home'' therefore, technically we should be living in the flat rent-free

They bought the property for us with a view to transferring to us in the long term, and to avoid us paying rent elsewhere

holly_hobby

Hi,

If this isn't a buy to let mortgage, then yes you can apply to have your name added to the deeds and mortgage (subject to satisfactory lender checks).

Or, if it is a buy to let, and you have sufficient income, you can effectively pch the property wholly from them (ie their names come off the deeds and yours goes on).

What is the balance of current mortgage ?

As depending upon this, there may be Stamp Duty (SDLT) to pay, if your effective share of the mge or the full debt (if parents will be completely removed from ownership & mge), excceds 125k (ie nil rate threshold).

If they tsf the property wholly to you, what is the arrangement with regards the deposit ?

From parents point of view, as this isn't their primary residence but they are beneficial owners, the transfer (either partially or wholly to you), is a chargeable event for them under capital gains tax - irrespective of whether any capital actually changes hands with them (as you are connected parties).

There may well be no CGT to pay at this juncture - given its recent acquisition, and especially if its only a partial transfer of equity. In this case CGT is calculated on the difference between the market value and original pch price, LESS permitted deductions, reliefs and exemptions inc their annual unused cgt allowance which is currently £10,900).

Your solicitor and tax adviser will guide on SDLT and CGT (for parents).

So first things first, you need to contact the current lender to see the position on adding you to the mge and deeds - do parents need to stay on or do have sufficient income on your own.

If you don't fit criteria, you could look to an alternative provider, which would be a simultaneous remortgage and transfer of equity if parents are staying on, or effectively a standard purchase if they aren't ..... your mortgage broker will guide.

Hope this helps

Holly

alanor

Thanks for your reply, holly hobby

It is not a BTL mortgage - the bank called it a 'mortgage for a second family home'.

What is the balance of current mortgage?
Around £220k with 12 years left

If they tsf the property wholly to you, what is the arrangement with regards the deposit ?
Partner's parents aren't worried about getting their deposit back

We're happy just to add my name (especially if this helps us avoid CGT & SDLT) but as long as this can reduce the monthly cost either (a) by contributing my lump sum or (b) by allowing me to extend the mortgage term

do parents need to stay on or do have sufficient income on your own.
I don't know if the banks consider 28k per year sufficient income, but we have been paying the mortgage [rent] so far so can definitely afford it

I will arrange to talk to the bank about adding me to the mortgage/deeds

Many thanks for your help

holly_hobby

Hi,

The maximum mortgage term will be dictated by the age of the oldest mortgagor (especially if their income is necessary) - many lenders (bar a couple) cap this at 75 yrs old (with sufficient post retirement income) - so extending the current term with the current lender, may not be an option if your parents in law are to remain on the mge and deeds.

If you are added as a jnt owner to the deeds and mge (which they lender may permit - given that typically lenders will permit a a max of 4 mortgagors), then you won't be exposed to SDLT at this juncture (given there will be 3 owners, with a total os mge of 220k, so HMRC will calculate your consideration being equal to 220/3 ie 75k). However, when/if they later tsf the remainder of their share to you/your partner (if not on their death), you will be exposed to SDLT if their share of the remaining mge exceeds nil rate SDLT at the time .... so carefull planning is reqd to circumnavigate this.

CGT assessment for parents - can't be avoided unfortunately - and is based on the market value of the effective tsf (not os mge) - so there may be some now, and also later (if/when they tsf the remainder of their ownership to you or your partner).

Anyhoo, yes, you and parents will need to have a chat with the lender, see how the land lies, what your options are, and possibly involve a mge broker for further options if reqd.

Hope this helps

Holly xx