House purchase - slightly unusual circumstances (maybe?!)
Discussion
Hi all,
I was wondering if anyone has had any experience in a situation similar to mine. I'm currently living with my girlfriend in a house (to all intents and purposes) owned 50/50 by said girlfriend and her Dad.
I am looking to buy out her Dad with cash, and she will reduce down her mortgage (currently in both their names) and take it over in her own name.
So far the thinking is that I'll pay her Dad, she takes over the mortgage, he comes off the deeds and the girlfriend and I establish a deed of trust between us, granting me 50% ownership of the house.
The house is worth £500k.
It feels like it is fairly straightforward now I've written it out, but a) does this seem sensible, b) am I missing something, c) what sort of costs would I be expecting and where?
I was wondering if anyone has had any experience in a situation similar to mine. I'm currently living with my girlfriend in a house (to all intents and purposes) owned 50/50 by said girlfriend and her Dad.
I am looking to buy out her Dad with cash, and she will reduce down her mortgage (currently in both their names) and take it over in her own name.
So far the thinking is that I'll pay her Dad, she takes over the mortgage, he comes off the deeds and the girlfriend and I establish a deed of trust between us, granting me 50% ownership of the house.
The house is worth £500k.
It feels like it is fairly straightforward now I've written it out, but a) does this seem sensible, b) am I missing something, c) what sort of costs would I be expecting and where?
Sarnie is your man here.
I am not an expert in this, but from a legal perspective I think you are referring to becoming Tenants In Common.
You will need to find out if they are Tenants In Common or Joint Tenants first of all.
This will let you know whether you can replace him on the mortgage and deeds (paying him only any premium in cash - which he will have to pay CGT on) or whether you need to have the deeds (and mortgage) changed to take this into account.
As I say, this is not my area and Sarnie can add much more to this.
I must also add that I don't know why you would want to do this...
I am not an expert in this, but from a legal perspective I think you are referring to becoming Tenants In Common.
You will need to find out if they are Tenants In Common or Joint Tenants first of all.
This will let you know whether you can replace him on the mortgage and deeds (paying him only any premium in cash - which he will have to pay CGT on) or whether you need to have the deeds (and mortgage) changed to take this into account.
As I say, this is not my area and Sarnie can add much more to this.
I must also add that I don't know why you would want to do this...
BaldOldMan said:
Dad might be liable for capital gains tax
You might be liable for stamp duty - assuming you want to register ownership with Land Registry
I want to pay what I should pay (I'm not trying to avoid anything) but didn't think my name would be registered anywhere due to my not going on the mortgage. If her Dad is liable for CGT then I assume that is his responsibility and all I do is 'pay the money' to him?You might be liable for stamp duty - assuming you want to register ownership with Land Registry
snake_oil said:
Why would you not go on the house deeds?
My understanding is (and I don't profess to be an expert) that whoever is on the mortgage goes on the deeds. JulianPH said:
Sarnie is your man here.
I am not an expert in this, but from a legal perspective I think you are referring to becoming Tenants In Common.
You will need to find out if they are Tenants In Common or Joint Tenants first of all.
This will let you know whether you can replace him on the mortgage and deeds (paying him only any premium in cash - which he will have to pay CGT on) or whether you need to have the deeds (and mortgage) changed to take this into account.
As I say, this is not my area and Sarnie can add much more to this.
I must also add that I don't know why you would want to do this...
I have a bad credit record, as I previously had a fairly serious drink and drug problem and the corresponding financial behaviour to go with it. I've been clean and sober just about two years but obviously it takes time for my credit file to improve. Hence I don't want to be financially linked to the girlfriend and am buying my half cash to avoid that (as well as not unduly borrowing when I have the funds available to do it).I am not an expert in this, but from a legal perspective I think you are referring to becoming Tenants In Common.
You will need to find out if they are Tenants In Common or Joint Tenants first of all.
This will let you know whether you can replace him on the mortgage and deeds (paying him only any premium in cash - which he will have to pay CGT on) or whether you need to have the deeds (and mortgage) changed to take this into account.
As I say, this is not my area and Sarnie can add much more to this.
I must also add that I don't know why you would want to do this...
I am lucky that I have (due to selling a business) no debt and money in the bank (and will do so after this goes through; I'm not going 'all in' on this financially).
As to the 'why' - having been through a divorce as a result of my addiction (had a deed of trust there too), I am aware that things don't always work out the way you expect them to, but I want to start building towards our (and my) future. If the relationship works out, no problem, and if it doesn't then I am comfortable that it can be dealt with reasonably (and have hopefully invested the money in something that will return something). Plus, in any case, we're improving the house as part of all this, and I'm quite happy that the house is becoming something that I have contributed to (design, decoration etc).
After everything that has happened in the last 5 or so years, I'm enjoying being able to be responsible and start to 'progress', if that makes sense.
I was in this position a few years ago... my fiance owned an equal share of a property with her dad and I wasn't a home owner, but I did have considerable assets.
We considered all the options and decided the easiest route was for me to pay rent to her dad and they continued to co-own the property we lived in.
If I was to buy out her dad, there would have been CGT, new mortgage applications, fess, surveys, valuations conveyancing, stamp duty etc... and in the back of our minds we knew that eventually we would want to move again and quite soon.
It made no sense to go through all that expense and hassle twice in a short period of time, so renting simplified everything greatly.
A couple of years down the line we married and were ready to buy a place of own. They sold the flat and me and my wife pooled all our assets together and bought the house of our dreams.
Happy days.
We considered all the options and decided the easiest route was for me to pay rent to her dad and they continued to co-own the property we lived in.
If I was to buy out her dad, there would have been CGT, new mortgage applications, fess, surveys, valuations conveyancing, stamp duty etc... and in the back of our minds we knew that eventually we would want to move again and quite soon.
It made no sense to go through all that expense and hassle twice in a short period of time, so renting simplified everything greatly.
A couple of years down the line we married and were ready to buy a place of own. They sold the flat and me and my wife pooled all our assets together and bought the house of our dreams.
Happy days.
Black_S3 said:
Sounds like a well intentioned but bad idea to me.
Would the figures involved let you buy your own flat and rent it out?
Thanks - what's the thinking behind it being a bad idea? I'm looking for perspective so am interested. The figures involved would let me buy my own flat and rent it out, albeit I'm not sure I want the aggro that seems to come with rentals (my parents have a couple of BTL houses so have some second hand experience).Would the figures involved let you buy your own flat and rent it out?
nitrodave said:
I was in this position a few years ago... my fiance owned an equal share of a property with her dad and I wasn't a home owner, but I did have considerable assets.
We considered all the options and decided the easiest route was for me to pay rent to her dad and they continued to co-own the property we lived in.
If I was to buy out her dad, there would have been CGT, new mortgage applications, fess, surveys, valuations conveyancing, stamp duty etc... and in the back of our minds we knew that eventually we would want to move again and quite soon.
It made no sense to go through all that expense and hassle twice in a short period of time, so renting simplified everything greatly.
A couple of years down the line we married and were ready to buy a place of own. They sold the flat and me and my wife pooled all our assets together and bought the house of our dreams.
Happy days.
Thanks, and congratulations! We don't intend on moving in the next couple of years (possibly in 5-7 years unless circumstances change significantly). We also have been (and have further plans to) improving the house and as such some of my money is already 'in' the house (and not valued in the price; we agreed that before any work was undertaken). I therefore want to get onboard so that any future gains are shared between myself and the other half. I understand the thought process in terms of avoiding expense and hassle but think our longer time frame reduces the impact of that a bit.We considered all the options and decided the easiest route was for me to pay rent to her dad and they continued to co-own the property we lived in.
If I was to buy out her dad, there would have been CGT, new mortgage applications, fess, surveys, valuations conveyancing, stamp duty etc... and in the back of our minds we knew that eventually we would want to move again and quite soon.
It made no sense to go through all that expense and hassle twice in a short period of time, so renting simplified everything greatly.
A couple of years down the line we married and were ready to buy a place of own. They sold the flat and me and my wife pooled all our assets together and bought the house of our dreams.
Happy days.
Gassing Station | Finance | Top of Page | What's New | My Stuff