Buying a house from family - mortgages, joint ownership and a few questions!

StatisticallyChallenged

I'm hoping their might be some mortgage experts/advisors around who can give me some advice.

Basic situation; A close family member owns a property which my husband and a currently live in (it is not her own home). Although she's still in good health now, she has a fairly substantial estate and it would make sense to think about transferring the house in to our names. She's owned the property for a long time but not lived in it, so there will be a capital gains tax bill due for around £70k (ouch!) which we would like to cover the cost of. The property is probably worth about £350k. We're in Scotland, in case that makes any difference.

Separately, but with somewhat serendipitous timing, some land adjoining our property is about to come up for sale. We'd like to buy it too with a view to extending.

I work for a large bank (but not in mortgages!), and have spoken to them and got a "mortgage promise" for £160k. This is based solely on my income, as my husband is self employed and has only been for a year. So his income can't be factored in. I'm waiting for them to call me back to go through the formal application, but I'm not sure how best to deal with things.

So, a few questions;
-Will the mortgage company be happy with the property being in joint names, but the mortgage only being in my name?
-If we were to purchase the property from her for £70k (to give her enough to pay the CGT), then would the mortgage company be likely to still lend me the £160K, leaving me enough to buy the land (still under 50% ltv)?
-Or; should I just buy the property for £160k, and let her buy the adjoining land for us? Would that be simpler from a mortgage perspective - I'd prefer the other way as we would be under the stamp duty threshold!
- are the mortgage company likely to insist that we have independent lawyers even though this isn't an arms length transaction?

Or is there another way we should be doing this? I'm aware this will be a PET from the perspective of Inheritance Tax so we're keen to start the clock ticking on the 7 years asap.

kingstreet

No. Borrowers and owners must match.

No. Purchase price or valuation, whichever is lower.

Yes. You can't borrow to buy the land.

Probably, yes. You will need a solicitor on lender's panel. Vendor may go without representation if there's no mortgage to be repaid, but your solicitor may not accept this.

Eviesmummy

I can't really answer your mortgage questions - there are others here who are far more qualified than me, but I am in the process of buying my parents house.
We're doing a family gifted/concessonary purchase (buying at under market value and using the equity in the house as the deposit) and we are both using the same firm of solicitors in the hope that this speeds up the process a little.

StatisticallyChallenged

Thanks both

Kingstreet, what impact is having my husband named likely to have on the borrowing ability? Essentially he will be classed as having no income bar child benefit as he's been self employed for less than a year but he has no outstanding debt or credit commitments at all either. His credit rating is excellent.

kingstreet

Your borrowing power will be lower with a non-working/dependent spouse.

StatisticallyChallenged

I've maybe worded that badly. At the moment the mortgage promise is solely in my name but they know that my husband exists and is self employed with inadequate books. Does just the act of naming him change the calcs?

Apologies for all the questions, under normal circumstances I would have used a broker but I am in the unusual position of having access to a very competitive staff mortgage so obviously want to use them if possible but it is a slightly complicated situation so I need to work out how best to structure it before I speak to them again for the formal application.

kingstreet

You are going to have to put these questions to your employer/lender if you want lender-specific information/procedures.