Remortgaging in different name only - Need some advise.

Asghar

Hi everyone,

Our mortgage term is coming to an end in a few months but it was an interest only mortgage in me and my wife's name.

We are currently not in a position to remortgage as I have a not so good credit history, or pay off the £50,000 that will be owed. Will it be okay for my son, who lives with us, to apply for a remortgage with another bank for the whole amount in his name only which will be used to pay off the current lender. The house value now is somewhere around £600,000.

We have no problem with the house being in his name only and hopefully as it's £50,000 we should not be liable for any stamp duty and hopefully no capital gains tax as it is our main home.

Hope the above makes sense, feeling a bit stressed at the moment.

AnotherJoe

Let me get this right, you are planning to give your son £550,000 because you owe £50,000 ?

Why dont you sell this house and buy another worth, say £500,000, leaving you £50k to sort yourselves out as well. ? Or a £400k house and £150k? Or, take equity release? Or something that doesn't involve giving away more than half a million pounds when you are on your uppers?

What is the thinking behind this apparent madness? You say you are "happy" for him to own it , what happens if in 5 years time he meets a woman, they get married, 5 years after that they divorce and she gets half the house? Or, he gets into some financial difficulty and creditors take the house? Or you fall out? Or he has someone come to live with him that you cant stand? etc etc.

Is this the kind of planning that got you into this financial mess in the first place? How long was the mortgage for originally and how long have you been ignoring paying it off?

muhandis

In your place, I would never contemplate doing what you have suggested. Situations and relationships can change over the future, the house being part of your son's estate could lead to a lot of problems in the future if anything unexpected happens.

Given that the mortgage is only 50k and the house valued at 600k, I would seriously consider downsizing and releasing some cash in the process for myself.

If you do decide to go ahead with your plan, you're right about CGT, you shouldn't be liable for any given it's your main home. Not sure about how the stamp duty works in this case.

I wish you luck.

Asghar wrote: »

Hi everyone,

Our mortgage term is coming to an end in a few months but it was an interest only mortgage in me and my wife's name.

We are currently not in a position to remortgage as I have a not so good credit history, or pay off the £50,000 that will be owed. Will it be okay for my son, who lives with us, to apply for a remortgage with another bank for the whole amount in his name only which will be used to pay off the current lender. The house value now is somewhere around £600,000.

We have no problem with the house being in his name only and hopefully as it's £50,000 we should not be liable for any stamp duty and hopefully no capital gains tax as it is our main home.

Hope the above makes sense, feeling a bit stressed at the moment.

Asghar

Thank you both for the very candid replies.

I realise now that from an outside view it does sound drastic but I was hoping to set up a deed of trust to show that we have a beneficial interest in the property and get one of our names back onto the property in the future. Or maybe try and get my wife's name onto the mortgage as well, she works part-time and earns £2500 pa. The mortgage lender might consider it.

Would what I planned to do be possible though, remortgage without any of the original mortgage holders being on the new one.

Yes, I have been an idiot with regard to my financial planning in the past.

getmore4less

If you can raise the 50k between you by not using a mortgage)he could by it off you(full value you providing the loan for the rest) with you retaining a life interest.

Does not solve all the problems(and introduces new ones) but avoids you becoming homeless.

Better might be to talk to the current lender to see what they may be able to do for you, maybe extending the term to give you a chance to start paying off some of the debt and look for solutions.

kingstreet

The bulk of the lending market will not permit you to continue to reside in the property after giving it away.

AnotherJoe

This seems to be a classic case of someone coming with a (terrible) solution to their problem and then asking how to implement it, without going back to basics and outlining the fundamental problem and asking how to solve that.

In your case, solely on what you've posted so far, and since you seem to have money issues in general (because otherwise getting off a £50k mortgage should really not be an issue) seems to me you would do far better to downsize, because if you stayed in the present house, would you not still be in financial difficulties either immediately or within a year or two??

You could settle mortgage and release some cash. Him becoming owner with some sort of cockeyed trust letting you stay there (that you didnt mention in your first post) will only lead to other issues later. Just dont go there.

AllyMac

If your son can pay a mortgage, he can pay rent. And you will have the currently interest payment you make.
£50K is not a big loan on £550 equity!
Have you spoken to a broker to see if definitely can't arrange something with your lender?