Transfer of Equity / SDLT question for a married couple?

Moonspark

Thanks for your further replies Holly and TrickyDicky!

The current mortgage in my name is on SVR.

The rationale for getting the new mortgage in joint names is a much, much better rate based on 2 incomes.

Do you know if we are legally allowed to not do the TOE, so the ‘technically’ and of course legally the ownership would remain in my sole name, but have the mortgage in both our names in order to avoid the double taxation issue/ paying SDLT again?

holly_hobby

There are only a couple of lenders that consider mortgagors whom are not legal owners - and whether you would fit their critera and like their rates and any associated fees etc, is another thing altogether.

There is no way to avoid SDLT if you want to put her on the deeds and at the point of transfer there is an os mge in excess of 250k (I've already explained what constitues consideration), if there was I promise I would have told you.

Really, and I mean this in the nicest possible way, is paying over £2k in SDLT really worth a slightly better rate ???

Crunch some figs, and if the new rate (taking into account any product fees) will give you a saving that matches or exceeds the SDLT and legal fees, then you may think its worth it, think of your saving over the term as effectively paying for the privilidge of you adding Mrs Moonie on (and although the SDLT & legals will req the fess to be paid in full at tsf), over the product period, you won't actually be financially down (based on a fixed rate, or if a tracker/discount is selected, the mortgagees Base Rate doesn't increase over the period ... which I give you may be unlikely from current BOE rumblings !).

Anyhoo, you have the bones of what the facts are in respect of this, to avoid incurring TOE SDLT on this property pay the mge down to 250k or below, if not, then if/when you move in the future obviously do so in joint names.

Hope this helps

Holly xx

TrickyDicky101

On a £410k mortgage you wouldn't need much of a rate improvement to justify the costs associated with the TOE. It all comes down to the figures.

Moonspark

Thanks, understand all your points, even if I don’t see the logic behind TPTB who set inflexible rules. There should be exceptions for married couples in our situation and there must be other's like us (exceptions that proove the rule). You have been very helpful, especially Holly. I still think that in our situation, and there are easily traceable bank records etc dating back almost a decade, when we became a couple, showing 50/50 on all financial matters, it is sheer robbery to extract more SDLT from us.

I completely 100% understand why lenders are exceptionally cautious, given the substantial amount of money at stake and why they might choose to insist that their borrowers are the same as on the title deeds to the security address. More so the other way around – ie if two spouses on the deeds but only one on the mortgage. So even if I accept that they need and should be allowed more security, and the lawyers would need more fees for extra admin, I simply cannot agree with the logic that HMRC should be entitled to get a further ‘cut’ in the deal.

Yes TrickDicky – as you say : ‘On a £410k mortgage you wouldn't need much of a rate improvement to justify the costs associated with the TOE’

So financially for us, it doesn’t take much calculation to know that the TOE route would make more financial sense, than leaving mortgage in my name only.

It’s now more a matter of principal, that I don’t believe the HMRC should be entitled to a single penny more of our cash for SDLT, after we paid it once @ 3% already.

So… in that regard, Holly, you say ‘There are only a couple of lenders..’ May I ask who those lenders are?

holly_hobby

Barclays and HSBC (direct business only) did use to consider mortgagors that aren't on the deeds - I can't promise that they are still open to such business, or whether the available products and any associated fees involved in switching, will still make the exercise attractive.

Just to top and tail, no lender will ever consider it the other way round, ie indvidual named on the deeds not being party to the mge.

H x

Moonspark

Shame, I was really hoping not to give HMRC something they clearly do not deserve.. double taxation, money for nothing…

But I know that other peculiarities in respective lending criteria, of the two you mention, will mean that they are not options for us. Fair enough, no probs with that, they are allowed to set their own rules over who they choose to lend to.

We do however meet the lending criteria for others, including the most competitive lender in the market place at this time, who we have the DIP with that is currently being converted.. survey instruction etc in the next day or 2 subject to festive delays.

However, HMRC / govt are surely democratically ‘chosen’ by to represent for the country / us, so although it won’t change this rule, which possibly originated from centuries ago(?), just out of interest… so just for academic purposes -am interested to hear your views as to whether you think it is fair that they should be entitled to a another SDLT handout from us in this case?

Mx

holly_hobby

Its also triggered when an owner is being taken off the deeds/mge, and the effective value of the tsfd mge to the remaining owner exceeds nil rate thresholds - unless as noted earlier, its as part of a divorce or judicial separation.

Whether I agree or not, is academic really, they'll be SDLT liability that has to be reported and paid .... the alternative is don't switch to a lower payrate which needs the Mrs adding (or at least until the os debt is 250k or less and/or SDLT nil rate threshold increases), and save yourself the fee.

I can't really add any more to whats already been said .... wish you well

Hope this helps

Holly x