Joint Mortgage - Help to buy

mikejones86

Hello,

I'm wondering if anyone can help me with a question about the situation we're currently in and the best way of achieving what we want

Currently I live with my girlfriend and she has a mortgage which is in her name and her dads name (joint mortgage)

We want to now move into a new house, we want to use help to buy if possible so to do this we need my girlfriend to not be tied to the mortgage but we want to be able to keep the flat to rent out in the future

Is it possible to take my girlfriends name off the mortgage (so it's just in her dads name) then me and her then purchase our new house with help to buy? then at a later date buy the flat back?

If it is possible, does her dad have to pay any stamp duty or any other costs?

Her dad currently owns a home but he is mortgage free.

We're basically trying to work out the best way of keeping the flat while still being able to use help to buy. I also can't get a large enough mortgage to do it on my own

Not even sure if it's possible! but thought I would see if I could get some advice.

campbell19925

If she has owned a property or owns one now she is not eligible for the help to buy. Doesn't matter if you take her off the jointly owned flat or not.

mikejones86

is that correct for help to buy equity loan? if she isn't tied to any mortgage or doesn't currently own a property? (once it was only in her dads name)

kingstreet

If you are talking about HTB Equity Loan on a newbuild, you cannot own any other property from the point of completion of the purchase until the HTB equity loan is repaid.

mikejones86

yes we want to use the HTB on a new build home, sorry for not making that clearer at the start

Ok, so we could leave the other property in her dads name for a number of years until we have paid off the equity loan

But is the switch to her dads name possible? and would her dad incur any costs like stamp duty?

kingstreet

Yes possibly, to both.

mikejones86

OK thank you, and it's legal to go down this sort of route?

Just wanted to get more of an idea of what kind of costs we might incur doing this, as we would be covering the stamp duty if her dad took on the flat alone.

kingstreet

You will need to get advice.

There will be mortgage and legal costs for the transfer of equity and the SDLT liability will depend on father's position as owner of other property.

Pixie5740

The father will only incur SDLT is he pays your girlfriend for her share of the property. She may incur CGT by disposing of her share of the property because it's not her primary residence.

kingstreet

Pixie5740 wrote: »

The father will only incur SDLT is he pays your girlfriend for her share of the property

What about 50% of the mortgage, especially if he owns this as a second property?

Pixie5740

kingstreet wrote: »

What about 50% of the mortgage, especially if he owns this as a second property?

It depends on how the mortgage will be dealt with.

- Are the father and daughter going to repay it in full and the father will them start a brand new one in his name only?
or
- is the father going to take over liability for the mortgage in his sole name?

The daughter is currently a legal owner but is she also a beneficial owner? The OP mentions letting the flat in the future but is the flat currently being let because it appears the father has a home elsewhere? If it is let who receives the rent?