Gift property with mortgage

Adz82

Hi All

I'm new to forum and wanted some advice if possible.

If a property Is gifted and falls under IHT but has outstanding mortgage. Does the mortgage get shifted to new owner? Or is this on discretion of mortgage company?

Also if it is gifted does that take in effect straight away or do you still wait 7yrs like IHT until it is completely shifted over on title deeds (property is under 325k)

secondly if I go down the joint tenancy agreement, but the existing mortgage company are offering a ridiculous rate, how would I go about this? My father is old so it be difficult to remortgage under his name, do I have to be on title of deed before we can leave existing mortgage company? Or can we go to a new mortgage provider and get them to do the joint tenancy and mortage shifted over to me so we get lower rates being younger.

xylophone

Are you able to obtain a mortgage and buy the house from your father?

saajan_12

Adz82 wrote: »

Hi All

I'm new to forum and wanted some advice if possible.

If a property Is gifted and falls under IHT but has outstanding mortgage. Does the mortgage get shifted to new owner? Or is this on discretion of mortgage company? - Gifiting a property involves changing the owners, which the mortgage company can (and likely will) refuse without being paid off. The recipient should apply for a new mortgage to buy the property for £X and pay the gift giver £X who uses it to pay off their mortgage.

Also if it is gifted does that take in effect straight away or do you still wait 7yrs like IHT until it is completely shifted over on title deeds (property is under 325k)- The amount of the gift = 'property market value - mortgage balance' (which will be paid off by the recipient over time). If the gift giver dies within 7yrs, this will be considered part of their estate, and IHT will be payable on the portion of the total estate above £325k.

secondly if I go down the joint tenancy agreement, but the existing mortgage company are offering a ridiculous rate, how would I go about this? My father is old so it be difficult to remortgage under his name, do I have to be on title of deed before we can leave existing mortgage company? Or can we go to a new mortgage provider and get them to do the joint tenancy and mortage shifted over to me so we get lower rates being younger.- That's a question for a mortgage broker, but I think going to a new mortgage company would effectively be getting a new joint mortgage, which would be hard if your father is too old.

You can't transfer a property with a mortgage, its technically a sale for the amount of the mortgage balance (call this £x). So, you borrow £x under a new mortgage and pay this to father who pays off his mortgage. The 'gift' is the property market value - mortgage balance (£x) for inheritance tax purposes (if father dies within 7 years)

Adz82

So is it best we go down the joint tenancy method, get title deeds and mortgage on both names?

saajan_12

Adz82 wrote: »

So is it best we go down the joint tenancy method, get title deeds and mortgage on both names?

Why do you want to go to joint?

Check if
1) the current lender is willing to add your name (subject to running credit checks on you)
2) Your father can get a new joint mortgage given age / current income.

If no to both, then its a non starter.

Adz82

Mortgage lender won't remove my father off and said he has to remain. So they will add me on title deed and mortgage.

Again want him on title deed also.

I'm just trying to weigh my options and if I am subject to SDLT here.

Property value: 525k
Mortgage remaining: 110k repayment

My father is 59yrs old so is unlikely to get a remortgage as he's self employed also.

If we went down the remortgage route I guess new lender may put mortgage on my name but treat it as a new sale and hit me with SDLT right?

So do we go joint tenancy or just gift deed and I pay mortgage over next 15yrs remaining.

Annisele

I don't think I understand what the problem is here.

Is it that your father is struggling to afford his mortgage, and you want to help him on a monthly basis? In that case, the easiest thing to do would be for you to just send him money every month (possibly structured as a loan from you to him).

Is the term of your father's mortgage coming to an end, and you're trying to help him pay off the capital? If so, if he hasn't already done so he'll likely want to see a mortgage broker. (It's quite possible to get a mortgage as a 59-year-old self employed person, but that of course depends on income).

Is it that *you* are the one struggling, and he's trying to help you get on the property ladder? In that case, the right answer probably depends on whether he's going to carry on living in the same property after the transaction.

getmore4less

what are you trying to achieve with this transaction?

who will be living in the house.

also value seems to have gone nearly £100k in a few posts

getmore4less

SDLT assessment will happen if there is a mortgage.

your ideal that "new sale" makes a difference is wrong

if you start paying your dads mortgage he needs to declare that as income.

gycraig_2

How are us ftb gonna afford properties when people like you are buying these houses for a pittance off your dads putting the value up 200k in mere hours.

teddysmum

With such a large amount outstanding on the mortgage would it be correct to assume that dad has no other assets ?


If so, it could be seen as a ploy to avoid paying care costs ,meaning he gets no help. Councils can look back several years at your finances (no 7 year rule, as some assume)and someone healthy at 59 can go downhill quite quickly a couple of years later.