Partner moving in - pay off mortgage?

schmiff

My girlfriend is selling her flat and moving into mine. She would be able to pay off my mortgage with the money from her sale, then we are planning to start looking for a new place together immediately. My question is, should we pay off my mortgage with the cash from the her flat, and if so what do we need to consider? Does she need to be added to the mortgage first (which I think essentially involves re-applying for it as a joint mortgage) before she can pay it off? Or can she just pay it off on my behalf once she moves in? Is there any danger of Capital Gains Tax? Does the whole thing need to be done via a solicitor?

(Not asking about the ramifications of whether she's added to the deed/mortgage etc in case we break up - we'll decide that between ourselves.)

Alternatively should she keep the money somewhere else and we continue to make mortgage payments on my flat until we buy our new place?

Thanks in advance!

chunkytfg

Can you get a better interest rate on the money compared to what your mortgage is?

If the plan is to sell up and buy somewhere together than its all about making as much as you can with the money and if paying off the mortgage to counter that is the best way forward then yes pay it off.

schmiff

Thanks - very unlikely to find a better rate so paying it off seems like a good option - just wanted to find out how it works and if there are any pitfalls involved.

chunkytfg

The bank may want to know where the money came from for anti laundering reasons and that may means forms to fill in etc but considering you'll be using the money to clear the mortgage and not just pay a bit it's less likely to be an issue with regards putting names on things.

Will you have an early reception charge?

DigForVictory

Have you lived together before?
You are sure she isn't a serial leaver of the toothpaste cap off & she knows you snore but is OK with it & anyway your cooking & washing up skills (amongst other virtues) outweigh all other doubts?

If you've never shared before, I'do go a little slower - maybe only by a couple of months but slower.

If on the other hand you are both robustly confident about a joint future then there's a lot of financial sense in her paying off your mortgage but do be seen to be taking financial & possibly even solicitors advice first.

Plus making a Will each, so that in the event of things happening suddenly the very last life insurance policy is in place & can cope.

Best of luck!

schmiff

chunkytfg wrote: »

Will you have an early reception charge?

Thanks, good to know. No early repayment charge fortunately.

schmiff

DigForVictory wrote: »

You are sure she isn't a serial leaver of the toothpaste cap off

If you've never shared before, I'do go a little slower - maybe only by a couple of months but slower.

She totally is, but I forgive her. We've spent enough time staying at each other's places that there's nothing left to hide.

DigForVictory wrote: »

Plus making a Will each, so that in the event of things happening suddenly the very last life insurance policy is in place & can cope.

Good advice - life insurance is high on the list of things to get sorted. Thanks

Socajam

schmiff wrote: »

My girlfriend is selling her flat and moving into mine. She would be able to pay off my mortgage with the money from her sale, then we are planning to start looking for a new place together immediately. My question is, should we pay off my mortgage with the cash from the her flat, and if so what do we need to consider? Does she need to be added to the mortgage first (which I think essentially involves re-applying for it as a joint mortgage) before she can pay it off? Or can she just pay it off on my behalf once she moves in? Is there any danger of Capital Gains Tax? Does the whole thing need to be done via a solicitor?

(Not asking about the ramifications of whether she's added to the deed/mortgage etc in case we break up - we'll decide that between ourselves.)

Alternatively should she keep the money somewhere else and we continue to make mortgage payments on my flat until we buy our new place?

Thanks in advance!

I would let her keep her money somewhere else and look for a house together, that way both of you each will have deposits and be added to the mortgage at the same time.

schmiff

Socajam wrote: »

I would let her keep her money somewhere else and look for a house together, that way both of you each will have deposits and be added to the mortgage at the same time.

Leading to another question - where is a safe place to keep £200k+ for an unspecified number of months?

AnotherJoe

Any main U.K. bank account there's an allowance up to a million (eg well above the £85k normal limit) for 6 months to allow for events like this. I'd probably pick something like Marcus at 1.5%. If longer than 6 months (check that duration maybe just longer) pick three.

getmore4less

She lends you the money(interest free)
Decide what payment terms to make it enforceable.

You pay off your mortgage

If she dies you owe her estate

If you die your estate owes her.

Loan repaid when you sell

Start working on the deed of trust to cover the new place.