Helpppp!!! First time buyers.

Lukeedwards88

Stuck with a conundrum!

My girlfriends parents have bought a house with a "private mortgage" and want to put the mortgage and the deeds in her and her sisters name. The mortgage is valued at £53000, the property could potentially be worth £85/90000. This house will be rented out.

My question is...we want to buy our first home together soon. How will this affect us in terms of Stamp Duty and Mortgages?

Thanks in advance

HouseBuyer77

Private or not it's still a debt so it will count against your girlfriend in affordability calculations. They'll need to take repayments on it into account, plus I wouldn't be surprised if many lenders just say no if you also have a private mortgage. They'd need to read the agreement and understand exactly what it is your sister is signed up to first, which won't be worth their while (or at the very least incur further fees).

Being private it won't show up on credit reports, so she'd have to specifically tell them about it. But to not do so would be fraud.

She will own part of a property so if she buys another one (whether jointly with you or on her own) she will owe the extra 3% stamp duty.

Lukeedwards88

I read somewhere if her share is worth less than £40,000 she won't be liablie?

What if she sold her share? Will she be liable for CGT?

G_M

Lukeedwards88 wrote: »

I read somewhere if her share is worth less than £40,000 she won't be liablie?

What if she sold her share? Will she be liable for CGT?

Yes, and yes.

Kynthia

Lukeedwards88 wrote: »

I read somewhere if her share is worth less than £40,000 she won't be liablie?

What if she sold her share? Will she be liable for CGT?

Share of the property or share of the mortgage, as half of £85/90k would be greater than £40k?

Yes if she's never lived in the property and there's a gain she could end up being due to pay CGT if it exceeds her annual allowance.

Lukeedwards88

I thinks off the value before the mortgage is taken away. So if the house ever gets valued above 80 shes screwed for stamp duty on a 2nd home?

Pixie5740

Who is this private mortgage with?

Will whoever loaned her parents the money allow the property to be transferred in her and her sister's named?

Why do her parents want to change the ownership of the property?

Who will continue to pay the mortgage? The parents or the gf & sister?

Who will get the rent money? Who will be the landlords when the property is let?

Lukeedwards88

The private mortgage was arranged through the solicitor and is direct with the owner of the property if that makes sense? They are paying the owner monthly for the property, using rental income etc.

The parents arranged the purchase but want it in their children's names as it is for them, it also means they won't have to pay SDLT.

The children will be liable for the repayments and they will receive the rental income.

HouseBuyer77

The private mortgage was arranged through the solicitor and is direct with the owner of the property if that makes sense? They are paying the owner monthly for the property, using rental income etc.

The owner? Who is the owner, or who is about to become the owner? If there's some third-party who owns the property and will continue to own it then this doesn't sound like a private mortgage arrangement, but something else entirely.

The parents arranged the purchase but want it in their children's names as it is for them, it also means they won't have to pay SDLT.

Who doesn't have to pay SDLT? SDLT can be due even if a property is just being transferred.

Lukeedwards88

The owner of the current property has sold the house to the parents via a solicitors agreement. My partner and her sister will be the new owners so no transfer etc.

Ozzuk

Is the debt transferable? Is the 'owner' happy for the sisters to now be paying them? The original agreement may be void if they are transferring the asset.