Borrowing against two houses

jennyf76

My Mum (in her mid 70s) and I have our own houses, both mortgage free and currently around the same price, so in affect an house swap -  around £200k (we’re up North!).

My Mum would like to downsize and move into our house, we want to move as my family have outgrown it and she loves the area/house.   We were wondering whether we could borrow against both houses -

• For us to buy a bigger property to move into
• Mum moves into ours
• We would do hers up to sell or even rent out.

Has anyone got any advice on this please ?  Is this do-able ?  Roughly how much money could we release from both houses ?  Has anyone done this before ?

I assume we’d need to talk to a mortgage broker, but would like some advice beforehand.

We had thought about us moving into Mums to do up - we don’t want to live there permanently -  mainly cosmetic and tidy up, but if possible I’d prefer not to.

I’m an only child so no other dependants on Mums house.

housebuyer143

So it's not a house swap as you don't plan to live in hers? Is your mother planning to own yours? That's the gist I'm getting from this, but it also sounds like you want to mortgage it to raise capital for you to buy a bigger/different house. 

Your mother isn't likely to get a mortgage, so if she plans to own it then I don't think it's in her interest to remortgage even if she could (so you probably can't release any money from the house she owns). You can't raise money on a house you don't own, so unless she's giving you her house which has all sorts of complications,  I don't think that's going to be an option. 

What you would normally do is a chain, so sell your mum's, she buys yours and you buy what you want. If you want do to it up, potentially you just unofficial swap, you can move into hers and do it up and then sell it from there? 

km1500

for me I would keep it clean and simple 

since both houses are of roughly equal value and under 250k then there will be no stamp duty to pay and no question of deprivation of assets so simply swap the ownership at the land registry. either employ a solicitor or you probably could do it yourself with the relevant  forms

once you have swapped houses you can then live in your mum's house for a short or a long time as you want and look at finding a different place from there if you wish

_Penny_Dreadful

jennyf76 said:

My Mum (in her mid 70s) and I have our own houses, both mortgage free and currently around the same price, so in affect an house swap -  around £200k (we’re up North!).

My Mum would like to downsize and move into our house, we want to move as my family have outgrown it and she loves the area/house.   We were wondering whether we could borrow against both houses -

• For us to buy a bigger property to move into
• Mum moves into ours
• We would do hers up to sell or even rent out.

Has anyone got any advice on this please ?  Is this do-able ?  Roughly how much money could we release from both houses ?  Has anyone done this before ?

I assume we’d need to talk to a mortgage broker, but would like some advice beforehand.

We had thought about us moving into Mums to do up - we don’t want to live there permanently -  mainly cosmetic and tidy up, but if possible I’d prefer not to.

I’m an only child so no other dependants on Mums house.

Who is "we" when you ask if, "we could borrow against both houses?"  You and your mum or you and a partner/spouse, or you, your partner/spouse and your mum?  

Generally speaking you take out a mortgage on the property you are buying and not two properties you want to sell.  The simplest route would be for your mum to sell her home and buy yours and you use the proceeds of the sale of your home + other savings + a mortgage to buy a larger home for your family.

Doing it by swapping houses as you have suggested is the way of doing it if you want to maximise the amount of SDLT you have to pay.  SDLT is due on the consideration paid so you would pay SDLT on the £200k consideration you pay for your mum's house.  You then pay SDLT again when your purchase the larger home that you really want and if you decide to keep your mum's home to rent out you will pay the higher rate of SDLT on the purchase of the larger home.  If you decide to go down the route of letting your mum's former home you could get a let-to-buy mortgage to release about 75% of the equity to go towards the purchase of your new, larger home.  You would need to do your research to determine whether the numbers stack up, how long it will take you to recoup that extra SDLT paid and how BTL stacks up against other savings and investment vehicles.  You would also need to consider if your mum's current home would make a good rental property, not all properties do.

Albermarle

Some conflicting info in the above two posts ?

since both houses are of roughly equal value and under 250k then there will be no stamp duty to pay and no question of deprivation of assets so simply swap the ownership at the land registry. either employ a solicitor or you probably could do it yourself with the relevant  forms

Doing it by swapping houses as you have suggested is the way of doing it if you want to maximise the amount of SDLT you have to pay.  SDLT is due on the consideration paid so you would pay SDLT on the £200k consideration you pay for your mum's house. 

jennyf76

Thanks very much for the replies. 

Housebuyer143 - Mum is going to own our house.  It does sound like the unofficial house swap is the way to go at first.

Km1500-  yes, best to keep it simple, do an unofficial house swap and then change land registry.  Then decide on options.

-PennyDreadful -  We (my partner and I) had thought we’d house swap, do Mums up and sell then buy another property with savings, mortgage etc.  Just wondering if there was any other way to do it.