Remortgage dilemma...

ErnietheOstrich

Apologies in advance for the lengthy post.

Back in 2010, we purchased the grandparents property for a bargain price. This was funded in a complicated manner...OH had deeds changed on parent's property (worth £800k mortgage free) and then remortgaged it in his and his mum's name to buy our current home(Paid £155k). OH mum has since passed away which basically means OH dad and sister feel very much that if OH died, I would get everything. If we both died, my daughter would get everything and they would be left with nothing. We now know that we had some very dodgy advice back then...

To try and sort this situation, OH has tried to mortgage our home on it's own merits (worth £250k now) so we can hand the parents home back to dad. We have spent a lot of money on will's to ensure it stays with dad should the unthinkable happen.

Long story short, we are struggling to find anyone to finance this and I can't work out why. We need the £155k as it has been interest only up till now so there is about £100k in the property. The mortgage will be in OH name only as I have had debt previously although all clear now.

TBH, this has put a wedge in the family and it's not a particularly pleasant situation to be in. I'm on the outside and can't help feeling like they blame me for it. They are now upset that we have had to finance a new car on HP as this will further thwart our plans to get a mortgage. We do already have debt to the tune of about £15k in credit cards and perhaps £2k in other loans.

Any advice greatly appreciated. I really don't want the situation in the family to escalate to having an elephant in the room every time we get together although, we are dangerously close.

EtO x

xyz123

What is employment and income status?

getmore4less

What a mess.

OH needs to stop now the risk is he will make it even worse.

Need to go back and work through the transactions as there is likely to be some some nasty IHT and CGT issue lurking.

this needs a proper plan to try and unravel the mess.

Just remortgaging your house and handing back the ownership of the parents home could result in a very nasty tax bill.

ErnietheOstrich

XYZ - We are both employed and have safe (well, as safe as they can be) jobs and no problem affording the mortgage.

GM4L - Yes, it really is. We have had some further professional advice and OH will now states that the deeds were only changed to facilitate the mortgage and it was our intention to sign everything back to Dad (and mum). I think he was told that handing the house back once we have a mortgage on this property will incur a tax bill of some description but I think OH just wants to keep everyone happy, especially Dad so wants to give it back asap. OH is going to try and call some mortgage companies today to explain the situation but I fear they won;'t touch us with a barge pole as it's so convoluted.... :wall:

getmore4less

With a £800k house it could be a very big tax bill

You can't just undo things by saying you made a mistake and want to change it back.

Guessing you have something like this(this will be the simple version)

1. Transfer parents house for the mortgage 2010 to Hubby and mum

If that was previously owned by both parents that's a £400k gift with reservation lurking on dads estate.

2. mum passing who did the estate administration and is it over 2 years yet? (may be able to do a DOV to undo some of the mess)

who got to own her share of the house(what was the value at that time)
if you then there is a £400+k transfer to non spouse and a IHT bill due on that and the loss of the transferable nil rate band to Dad.

3. if you give it back now that is a disposal so what's it worth now, CGT bill on the difference if you have not been living there.

then you now have dad with the house(£800k+ and a £400k gift with reservation(unless gifting back undoes that in some way) and no IHT transferable nil rate band.


Probably a lot more complicated.

this needs some serious IHT planning.

then you have the house you own that was bought on the cheap so there may be some gifts lurking with that as well.

ErnietheOstrich

Thank you GM4L. I will show this to OH and see if this was all covered with the recent visit to solicitors with Dad and his siblings.