Advice on transfer of mortgage

Bobbymac1979

Hello, so here is our situation.
We live in a house that my parents own and we pay the mortgage etc. It was a 15 year mortgage and it’s coming to an end 12 years, 

what is the process of transferring a mortgage, we don’t have a deposit to take over the house from parent, they have 130k to pay on the house left and it’s valued at roughly £160k

Are we able to look at transferring mortgage to us, or do we take out a new mortgage and in theory buy it off my parent etc, 

would we need a deposit? Advice would be good before we go to see our bank etc 

MWT

I assume your parents are the only ones on the deeds at the moment?

Are they proposing to give you the house and have you replace them on the deeds?

If so then they are effectively gifting you the difference between the mortgage and the valuation of the property.

You would then take out a new mortgage for the amount required to redeem the current mortgage and your LTV would be based on the mortgage you require and the valuation of the property just like normal.

No deposit required as the remaining equity in the property has been gifted to you...

There may be tax implications for your parents if this is not their main residence and possible IHT issues depending upon how long your parents survive this transaction.

Anyway, a little more detail about this would help people give more direct comments...

Bobbymac1979

Ok more info, it’s just my parents on the mortgage, they have several houses, ends in 3 years and they want it off their hands etc, we are not sure the best or easiest way to do it.

They want us to take over the mortgage and get a new mortgage on the house for my wife and I, 

the mortgage has been an interest only one so it still has 130k to pay off as original 10% dep put down was £15k, (bought 145k 12 years ago)

house value unsure, similar in the area have sold for 170-190k, but as this is all new to me some houses for sale in the area have been valued at 125k (checked home report online for one) and then sold for 190k which I find odd as not sure why the value would be so low, 

In theory my parents would like the 15k deposit back off me, mortgage wise we can get enough to cover it, 

we are unsure best way to proceed, I need to speak to the bank or mortgage advisor to kick us off,

if the house is valued at for example 170k and we want to get a mortgage that is enough to pay the 130k off and the 15k to parents (145k) is there a way to get more to do some renovations? Like double glazing etc? 

Thanks 

MWT

I'd start off by talking to a broker to figure out what you can reasonably expect to borrow based on your income and other financial circumstances.

After that it is down to the valuation of the property.

If you need to get £145k to settle the mortgage (£130k) and pay £15k to your parents there isn't going to be a lot of scope for additional borrowing as it looks likely you will be already be around 85% LTV.

A lot depends on what you can borrow, so perhaps start talking to a broker and see what they suggest...

Thrugelmir

There might be tax implications. The market value needs to be ascertained properly.  Irrespective of what you actually agree to pay for the property. 

Bobbymac1979

Thrugelmir said:

There might be tax implications. The market value needs to be ascertained properly.  Irrespective of what you actually agree to pay for the property. 

How would I find about the tax implications for my parents?

MWT

Bobbymac1979 said:

How would I find about the tax implications for my parents?

That is really one for them to investigate, I mentioned it in my first reply to you because given this is one of a portfolio of properties they own not their main residence they will have some exposure to CGT on the increase in actual value, not just the effective price they are selling to you at.

I imagine they have an accountant they use for their annual tax returns as they will be declaring income from these properties, so it is one for the accountant to advise them on...