Ownership change - lender view?

EdInvestor

Wife has a BTL ( former PPR) with very small mortgage,currently 20% LTV.Wants to swicth ownership of property to tenants in common with husband, on 70-30 basis, husband to take 70%. Loan would become 60% LTV on basis of her 30% of the property.

Will the lender (Abbey) accept this change? Is it straighforward.
What costs might be involved?

The planned change is for tax reasons.There are no current or historical problems with the loan which started in 1999.

TIA for any comments.

silvercar

Hope the husband realises he won't have any PPR relief on his 70%.

EdInvestor

Really? It was his former PPR as well as hers.

Dan_Collins_2

Should be ok, both parties will be liable for the mortgage in the normal way which is why they need to get legal advicebefore they change it as they could be liable for more mortgage than they are property! In this case thats not really an issue because of the equity.

silvercar

EdInvestor wrote: »

Really? It was his former PPR as well as hers.

I didn't read it like that from the OP.

EdInvestor

Dan_Collins wrote: »

Should be ok, both parties will be liable for the mortgage in the normal way

The husband is not really mortgageable on a normal PPR mortgage basis: the point of the exercise is to generate some income for him as he is unemployed and has an unused tax allowance (whereas the wife is working and has pensions and is thus now in the higher rate band due to the rental income from the BTL).His capital is all buried in their other flat (their PPR) which he owns outright in his name.

The loan is apparently in two bits already, as it was extended at one point with the second bit i/o on a BTL basis and the major bit repayment on a PPR basis.The rental income is 9k p.a and the loan repayments around 2k.Equity is currently about 80%. Flat has been rented for 3 years (formerly the couple's joint PPR), so should be no CGT liability if they sold at this point and minimal going forward.

Any creative ideas about how to sort this situation with the minimum of hassle very gratefully received.

EdInvestor

silvercar wrote: »

I didn't read it like that from the OP.

Sorry, you're right, I wasn't clear.

silvercar

I think you should post on the tax board, some ex inspectors there. There are some funny rules regarding rental income being treated as unearned income.

Transfers between husband and wife have no tax implications so could probably be done by making a declaration to the inland revenue, with no need to involve the lender.

Dan_Collins_2

Yes, go the tax side of things. All i was saying is it is possible from the lenders point of view. You can get B2L mortgages if you dont have an income, on that size mortgage you should not have an issue. You need to watch that he does not have tp pay any stamp duty and if you stay with the current lender you need to do a transfer of ownership. Call the lender and they will cover the rules etc. There may be a fee dependant on the lender and we are not talking £1000's. Legal side needs to be done via a solicitor and should not cost to much, he/she will set the property up and can look in to the stamp duty issue.

EdInvestor

Thanks Dan.I get the impression the lender might just need a joint charge on the property rather than an actual joint mortgage? Stamp duty should be fine as the 70% share of the BTL is just below the 125k threshold, and the other property is exempt as in a regeneration area.

Dan_Collins_2

EdInvestor wrote: »

Thanks Dan.I get the impression the lender might just need a joint charge on the property rather than an actual joint mortgage? Stamp duty should be fine as the 70% share of the BTL is just below the 125k threshold, and the other property is exempt as in a regeneration area.

As long as the lenders interest in covered you are probably right.