Transferring of property

Icebergggg

They wouldn't pay rent. I have a sibling that lives with them that earns. But if I can help it as I am the sole mortgagee, I would cover housing costs. This sibling, as is doing now is covering these costs 'unofficially', the reason I pose going through this mortgage route alone is that I am in an employment position where I would be far more likely to gain a mortgage at this value etc.

mrginge

You have said that the house is worth at least 240k.
You propose buying the house for 95k to clear the outstanding mortgage.
Your parents therefore have assets of 145K.
They will be giving this away, to you, for nothing.

This is deprivation of assets.

Keep_pedalling

If I have read this correctly you are planning to do this alone not jointly with your sibling. How do they feel about losing their share of a future inheritance?

Pixie5740

Icebergggg wrote: »

Would equity in the house at fair market value of 60%, i.e., I only need a loan for 40% of the value. So therefore, presumably that 60% is akin to a deposit

Only if your parents gift you the equity that is in the property.

Otherwise the LTV is calculated on the purchase price or property valuation, whichever is lower.

Icebergggg

mrginge wrote: »

You have said that the house is worth at least 240k.
You propose buying the house for 95k to clear the outstanding mortgage.
Your parents therefore have assets of 145K.
They will be giving this away, to you, for nothing.

This is deprivation of assets.

I completely understand this. But this is a case of that is £145k if realised. Hell, the house price could keep skyrocketing in this inflated world and be £250k equity when the mortgage ends. But, it is a case of being unrealised. The familial situation is such that it wouldn't be realised if they can help it. They want to live there for the rest of their lives, my sibling has also mental disabilities and his mentality is he feels completely comfortable there also. So, the idea of looking into ways to secure the property in the most affordable and sustainable way, then riding out an interest only mortgage with no plan, was my intention with these questions.

It is £145k, that is of no use, if the property is realised today, they live in Brighton, that can not even get you a studio flat currently.

For reasons above, there when you really look into it is no deprivation of assets. As I would never realise the asset anyway.

It was just a way of me looking into however complicated, the most cost beneficial way to secure long term security on the property

Icebergggg

Pixie5740 wrote: »

Only if your parents gift you the equity that is in the property.

Through this route, they would do. They would sell a 100% share of the deeds on the property to me for a sum of £95k. They would then have to meet their outstanding obligations to their lender

Icebergggg

They way it works is essentially, I am not looking to make any money out of this. You only have inheritance to give if it is secure. I am just looking to secure it for all of us. But it is a case that it is securing a roof over the head of my parents and my sibling. If this all was able to occur. at some point in the future once its paid off I will happily gift it to him before the 7 years or whatever the rule is.

Sorry meant to directly reply to 'keep pedalling'.

Pixie5740

Icebergggg wrote: »

Through this route, they would do. They would sell a 100% share of the deeds on the property to me for a sum of £95k. They would then have to meet their outstanding obligations to their lender

:wall:

And you will find it difficult to obtain a mortgage for £95k using a gifted deposit coming from someone who will remain living in the property.

See a mortgage broker.

Get legal advice as should your parents and your sibling(s).

Mojisola

mrginge wrote: »

Your parents therefore have assets of 145K.

This is deprivation of assets.

Icebergggg wrote: »

I completely understand this.
For reasons above, there when you really look into it is no deprivation of assets. As I would never realise the asset anyway.

It was just a way of me looking into however complicated, the most cost beneficial way to secure long term security on the property

I don't think you do understand it. However you might assess the situation, your parents will have deprived themselves of £145k.

It might never be a problem for them but, just because you don't think it's deprivation doesn't mean that the authorities won't assess the situation differently.

There are also other potential problems which you don't seem to have considered. The house they are living in will be yours so, if you go bankrupt or divorce or die, the house might have to be sold and they would be homeless.

If you own a property that you don't live in, you will be unable to claim means tested benefits so, if you became ill, you would be in trouble.

If you became unemployed, how would you be able to pay the mortgage?

Your parents need legal advice and you need legal advice from a different solicitor before you progress any further.

Innys1

Icebergggg wrote: »

They wouldn't pay rent. I have a sibling that lives with them that earns. But if I can help it as I am the sole mortgagee, I would cover housing costs. This sibling, as is doing now is covering these costs 'unofficially', the reason I pose going through this mortgage route alone is that I am in an employment position where I would be far more likely to gain a mortgage at this value etc.

Is this transaction a sale or a gift, from a tax perspective? It makes a difference from the perspective of Inheritance Tax.

The fact that the transfer is at less than market value would seem to indicate it is a gift.