Mortgage Deposit: Borrowed from family, paid back after selling property

Tade

Hi,

My wife and I would like to move house.

This is how we would like to proceed:

1) Buy our new home, and secure a mortgage by putting down a deposit partly from our own savings, and partly by borrowing money from family (parents/grand parents)

2) Sell our existing home within a few months and with the equity in this pay back our family.

We would like to buy the new home, before selling our current one so that we can offer a "no chain" to the seller. Selling our current home should not be an issue - it is in a desirable location.

Would anybody be able to advise on the following:

- When selling our existing home would we need to pay capital gains tax, because at time of selling we would have two properties?

- Are there any other taxes we should be aware of? For example, if a member of our family died before we paid back the borrowed money would we need to pay inheritance tax? And if so, would we need to pay the tax straight away - even if we havent sold our 1st home yet?

Many thanks for in advance for any advice

Thrugelmir

Are you intending to let your existing property?

Is your existing property mortgage free?

amnblog

No taxes on sale of your primary residence.

The lender for your new property won't be comfortable with your using a 'loan' for deposit.

Tade

Hi,

Thank you for the replies

We are not intending to let our existing property. We intend selling it, by putting it on the market at the beginning of January. It is not mortgage free, 60% loan from the bank

In terms of there being no taxes on sale of our primary residence. What does primary residence mean exactly? Does it just mean that we don't transfer our electoral register over to the new address until after we have sold our existing one?

Understand that the lender won't be comfortable with a loan for the deposit. We will be getting the money as a gift instead.

mrginge

Tade wrote: »

Understand that the lender won't be comfortable with a loan for the deposit. We will be getting the money as a gift instead.

Post #1 it's borrowed, post #4 it's a gift.

Which one is it?

SeduLOUs

I may be wrong but suspect that a new lender will take into account the fact you already owe money on another mortgage when considering whether to lend to you.

You can say you are going to sell immediately, but they have no guarantee of that and will assess your affordability accordingly.

Tade

mrginge wrote: »

Post #1 it's borrowed, post #4 it's a gift.

Which one is it?

It's a gift. We won't need to pay it back

Tade

SeduLOUs wrote: »

I may be wrong but suspect that a new lender will take into account the fact you already owe money on another mortgage when considering whether to lend to you.

You can say you are going to sell immediately, but they have no guarantee of that and will assess your affordability accordingly.

Thanks yes, we have been advised that this will be a factor in the affordability test