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Original poster

Mortgage on a 'gifted' house?

12 replies

blindinglight · 02/03/2013 21:30

FIL wants to gift his house to us. We would never be able to afford a mortgage for the value of the house. We are both recently self-employed and husband has an average credit rating (few late payments).

If we accepted FIL's offer, we would need to do a lot of work to the house to live in it. Would we be able to get a mortgage on the house without a deposit? (Is it a mortgage or remortgage in this case?! No idea!)

OP posts:
GinAndSlimlinePlease · 02/03/2013 21:34

Why would you need a mortgage of it's a gift? Is it to do the work?

What matters to the mortgage company is the loan to value rate. This is the percentage you need to borrow against the value of the house. So if you need a mortgage of 40k and the house is valued at £100k, then your LTV would be 40%.

Original poster
blindinglight · 02/03/2013 22:26

Yes, we'd need to do a lot of work so would need to borrow against the house

OP posts:
LadyKooKoo · 03/03/2013 09:21

Does your FIL owe the house outright? He can only gift it if he does.

LadyKooKoo · 03/03/2013 09:23

*own!

LegoAcupuncture · 03/03/2013 09:26

If he is gifting it to you, once the deeds etc are signed over you'd do a remortgage on the house.

I take it he owns the house outright?

Charmingbaker · 03/03/2013 09:28

If the house is gifted to you then you will own the property outright. You can then approach a mortgage company for a mortgage, you will not need a deposit- your deposit will be the equity in the house. The only thing you will need to check is will you be able to get a mortgage to cover the cost of the improvements you want to make ( a mortgage advisor can advise you on this) and is the house mortgageable (some types of constructions are not).

AuntieStella · 03/03/2013 09:43

And make sure everyone checks their tax liability, so there are no nasty later surprises which derail your plan.

Original poster
blindinglight · 03/03/2013 19:25

Thanks for the replies.

Yes he owns it outright. We have checked tax liability and if he gifts it to us and does not die (!!) within 7 years then we are not liable to pay inheritance tax. Also, as he is gifting the house and not expecting anything in return there is no stamp duty to be paid either.

Need to call a mortgage advisor I suppose and see what the next step would be.

I suppose the amount we can borrow is still based on our income? I'm worried that because we are both recently self employed (just 1 year) we might get refused a mortgage outright!

OP posts:
LadyKooKoo · 03/03/2013 20:04

Speak to a financial advisor, they will be able to best advise you on mortgages for the self-employed. Inheritance tax will only be an issue within 7 years if the whole estate is worth over £325k.

financialwizard · 04/03/2013 10:34

Have you got your first years accounts done yet, or will that be done next month?

If you have a years accounts and were doing something similar prior to going self employed then I know of a lender that would help.

KnightRob · 06/03/2013 14:48

I trust you're aware that if he continues to live in the property after having made the gift, unless he pays full market rent, there won't be any Inheritance Tax advantages, no matter how long he lives (it would be classified as a Gift with Reservation).

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