Transfer of equity

matthawes

In short. Five years ago, wife and I with father in law bought a property. Now remortgaging but without father in law on the mortgage. He wants to pass equity onto us (just like a will I suppose) and not be on the mortgage. How does this happen. Essentially my wife and I will be on the mortgage and title deeds not father in law. Any help please?!?

Keep_pedalling

Are you all living in the property?

He can gift you his share but he needs to understand how this might impact his long term security and the issue of deliberate deprivation of assets. 

matthawes

We are all living in the property. Converted garage. He is fully aware and happy to do so. 

user1977

Does your new lender know that he's there?

matthawes

The new mortgage company we are remortgaging with? Yes they do. They have asked to do the transfer of equity form. Just wanted to know how to approach the legal/monetary side of things like tax and stamp duty. 

Richard1212

The following link is a good one to save time going into detail on this thread  https://manaksolicitors.co.uk/services/residential-property/transfer-of-equity-the-process-explained/

But,as someone has said already, please make sure your father-in-law's future financial status is secure. I assume he is going to continue living with you, but has he got enough left after his gift to you for unforeseen needs for possible residential care etc----after all, it's not like he has died and left you his share of the house in a Will ? 

Other than that, his generosity is kind and the whole legal process is easy. Costs could add up to as much as £1,000 including solicitors' fees, Land Registry fees etc. Check that CTG is not payable. Best wishes.

kingstreet

Are you remortgaging, or are you remining with current lender and taking a rate switch and doing a TOE at the same time? The process is different for each.

matthawes

We are remortgaging with a new lender and TOE at the same time. 

kingstreet

matthawes said:

We are remortgaging with a new lender and TOE at the same time. 

Ok. Therefore, you apply for a new mortgage with the new lender. The solicitor or conveyancer appointed to handle the remortgage can/will also handle the "one-off" transfer of equity. If you chose "free legals" the TOE will be chargeable. Otherwise it will add to the remortgage legal bill

At completion, the old mortgage will be repaid and the TOE finalised so the two parties remain.

Hopefully, you have selected the right lender as many won't accept someone not on deeds and mortgage remaining in the property.

Father in law will have no CGT implications if his main residence but as he will remain in the property the equity forfeited will remain in his estate for Inheritance Tax purposes due to the Gifts With Reservation provisions. You should ask solicitor about SDLT liability based on amounts concerned.

Lender may require gift documentation to reflect what equity FIL is giving up.

If what you want isn't covered you need to ask more specific questions.

matthawes

kingstreet said:

matthawes said:

We are remortgaging with a new lender and TOE at the same time. 

Ok. Therefore, you apply for a new mortgage with the new lender. The solicitor or conveyancer appointed to handle the remortgage can/will also handle the "one-off" transfer of equity. If you chose "free legals" the TOE will be chargeable. Otherwise it will add to the remortgage legal bill

At completion, the old mortgage will be repaid and the TOE finalised so the two parties remain.

Hopefully, you have selected the right lender as many won't accept someone not on deeds and mortgage remaining in the property.

Father in law will have no CGT implications if his main residence but as he will remain in the property the equity forfeited will remain in his estate for Inheritance Tax purposes due to the Gifts With Reservation provisions. You should ask solicitor about SDLT liability based on amounts concerned.

Lender may require gift documentation to reflect what equity FIL is giving up.

If what you want isn't covered you need to ask more specific questions.

Amazing. Thank you so much for the informative response. Much appreciated