Sell house investment? Might not have a choice, is there a way around this?

[LittleMissSparkles]

I will try and be as brief as possible on this situation.

I am frantically searching the net and I'm not coming up with many answers.

I currently own outright 2 properties.

The first me and my family are living in, we couldn't get a mortgage 15years ago so my parents bought us the house and we paid them off for the house (they were our mortgage company so to speak) we paid the house off and the deeds and land registry have been updated in my name. At the time we avoided stamp duty ect as thE property was under the stamp duty threshold.

Property 2 was a inheritance property that had been put in trust for me from a very young age. It is now a rental property.

Me and my family our now moving and our intentions were to keep hold the house we are currently living in as a rental and taking out a part residential and a small buy to let property to make up the shortfall.

The residential mortgage was agreed in principal and I needed to go back to set the buy to let in principal.

The buy to let mortgage application was declined, however it has been approved if my mother comes on the mortgage with me. Now due to her age this now has to be over 10years. I have a bit of bad credit that drops off the end in 2 years so the plan was to then take mother off and for me to get my own. But this means a new mortgage and lots more additional fees in two years time. Understandably my mother is now getting cold feet as we cannot find out the following.

Will I be in effect gifting her half of the property as she will need to be named on the deeds?

Will there be stamp duty? House is currently worth £240-£250k

If she dies will there be inheritance tax on it?

Will there be capital gains tax?


My two only options are.
A) get mother on my buy to let mortgage (interest only) not really happy about that as even tho its a done thing with buy to let's. I just can't get my head round owing the bank the amount I have borrowed and just repaying the interest.
B) sell my current property and purchase my new home outright and be mortgage free.

My heart is saying if we can keep hold this is what I would like to do as each moth we will be better off despite paying the mortgage and we will have a asset.

But on the other hand if we sell we will be mortgage free and not have the hassle of tenants and repares ect. It was a new build when we moved in 15 years ago but it has got quite a few problems and the area is getting worse as time goes buy, but the rental value is about £1k a month.

Any help advise or opinions very great fully received.

Many thanks for your time.

[grumpyoldgitagain]

Surely they only want her on the mortgage as a guarantor and ownership won't be effected in anyway

If you are buying the house you buy the house

My SIL has a mortgage on my MIL's rental property as she needed a large lump of money but is not on the deeds at all

[grumpyoldgitagain]

Reading again if you already own the rental outright you shouldn't need to alter the deeds just take out a joint mortgage on it to raise the money needed and hopefully the rent each month will pay it or a large chunk of it

A solicitor will be able to advise properly but I think your bad credit is just making them think of your mother in a guarantor sense rather than anything to do with ownership or deeds

If you don't pay then her credit is affected so she will make the payment rather than let you default

[grumpyoldgitagain]

My understanding is no stamp duty as you are not selling it only remortgaging

No inheritance tax as she has no ownership of it only borrowed money against it in a guarantor sense

Capital gains tax should only apply on sale and you are not selling just looking to raise money against an asset

Anything more detailed will have to wait until my DW finishes work or someone else similarly qualified in tax matters comes along, but that is my understanding of it

[LittleMissSparkles]

That was quick, thank you so much for your replies.

Wow I did not know that was the case. The mortgage lender said we need to change something to tenants in common.

If my mum is just a guarantor how come the mortgage how come we are restricted because of her age?

Sorry for all the questions I am totally new to this and struggling to understand everything.

[grumpyoldgitagain]

Tenants in common is I think a change on the deeds not sure why though maybe I am wrong

Have you tried ringing a couple of different mortgage companies or an independent financial advisor to ask about remortgaging with your mum as guarantor as you have something adverse in your credit rating

I would guess the term is still valid and will be the same even with your mum as guarantor as they will look at how long they think she could guarantee it for in the same way as if she held the mortgage