Remortaging a self built house

Vin79

Hello,

I recently embarked on building my very own home for my family, well I say recently, more like three's years ago. My father helped me finance the built by re-mortgaging his own home, and I financed the rest with my saving. We are now ready to move into the property, but have come across a slight difficulty. The banks will not re-mortgage my new home, to pay off my dad's property, because we have not lived in the property for more than six month.

I am currently on the deeds for my parents’ home, which means that, their property is my primary home. It is possible to move to my new self-built house, and take my name off the deeds, and then keep making payment to their mortgage. Until the six months passes, to re-mortgage my primary home to pay off my parents’ home..

Thank you for reading my thread.

holly_hobby

You can not transfer mortgage borrowing between properties ie swap it from 1 house to another.

However, not all lenders have the 6 mth self imposed ownership criteria (depending upon the background), you would be best speaking to an experienced whole of market mortgage broker to determine what options you have. (reason for equity release will also have to be acceptable, along with status checks etc).

Hope this helps

Holly

Vin79

Hi Holly,

Thank you for your advice. Hopefully I will speak to Lloyds and other lends today in my lunch hour. I will ask the question, if this particular policy applies to them as well. Fingers crossed it doesn't, otherwise what are my option?

Wh05apk

I think someone is getting their wires crossed, generally lenders have an issue with remortgaging where the property has been owned for less than 6 months, how long or whether you live there should not be a problem.

Vin79

Hi Wh05apk,

Would I be right to assume, if we move into our new home, and lived there for more than 6 months. I should in theory then be okay to re-mortgage the property (new built), thus then being in a position to pay back my father’s mortgage?

Thank you for your advice, this helping me a lot

holly_hobby

No, its not the residing there thats the issue, its the actual period of ownership in your name thats the snag ( or in this case from when the property was completed and registered with Land Registry in your name).

As I say, not all lenders have the 6mth ownership criteria, and those that do can sometimes be flexible depending upon the circs surrounding the submission. (along with the reason for equity release, private loan in this case, being acceptable).

Speak to a mortgage broker.

Hope this helps

Holly x

Vin79

Hi Wh05apk,

Would I be right to assume, if we move into our new home, and lived there for more than 6 months. I should in theory then be okay to re-mortgage the property (new built), thus then being in a position to pay back my father’s mortgage?

My only problem is, do take my name off my father’s property deeds, in order to have only one primary residence?

Thank you for your advice, this helping me a lot

holly_hobby

If you are named on Dads mge then your income will have to be sufficient to support both the new mge on your self build, and Dads existing mge (as you won't be able to reduce your joint borrowings with Dad until you have completed your own remortgage exercise).

Then, you will only be able to remove your name from Dads deeds (called a Transfer of Equity/TOE) and the joint mortgage, if his income is sufficient to service any os mge (after your lump sum reduction) and his age at redemption falls in with any maximum the lender may have (typically 75 yrs). If not then you won't be removed (although you may be able to facilitate this release via a remortgage with an alternative lender, again depending upon Dads income and his age).

There may be stamp duty issues (SDLT) with respect to the TOE and Dad (if the associated consideration exceeds 125k).

If you aren't able to be removed from Dads mge, and the property is later sold 18mths or more after you move out, your share of any gain will be exposed to capital gains tax computation, but not necessarily any liability given the various exemptions and reliefs available.

I would really suggest you obtain independent financal and mortgage advice.

Holly