Transferring a mortgage into another person's name

[Z064life]

Hi All

Some financial planning advice needed

I'm in the process of remortgaging my BTL property (but looking at how best to reduce the sting of the changed tax laws, overpayments being one way). The house value has gone up 180k in 6 years which is a good return so I don't want to sell the property.


In the mean time, my parents would like to downsize the main residence for tax reasons etc as they're planning retirement.

One idea has been in a few years time the mortgage and title deed gets put in my name and I pay the mortgage/runnnig costs of the home. Would this normally be a possible option? I earn 56k which, in today's London, wouldn't even get me a mortgage on a front gate to a house, so wouldn't lenders immediately reject me from an income affordabiity POV (I hate this measure of affordability, it is crude and does not take into account living arrangements which are a big outgoing!)?

In the mean time, I could afford £1000 or thereabouts on a mortgage that I pay. I also consider running costs of a BTL property like insurance, void periods, etc.


Thanks

[Burgmeister]

In effect you'd need to buy the property from them which means their mortgage would be closed and a new one, for you, would be opened. Affordability for mortgages is not as simplistic as you describe, outgoings are factored in as well as income. This gives the lender a much better idea about what you can actually afford.

One way around the faff associated with the above would be to get them to add you to their mortgage (some lenders will only allow two people per mortgage so watch out for that) and once you're added they can be removed...

[Z064life]

Burgmeister said:

In effect you'd need to buy the property from them which means their mortgage would be closed and a new one, for you, would be opened. Affordability for mortgages is not as simplistic as you describe, outgoings are factored in as well as income. This gives the lender a much better idea about what you can actually afford.

One way around the faff associated with the above would be to get them to add you to their mortgage (some lenders will only allow two people per mortgage so watch out for that) and once you're added they can be removed...

So the mortgage can't be transferred without all the checks etc, but another person (limit of two) can be added without the checks? However, if the primary person on the mortgage (let's assume there was only one name on the mortgage) died, all responsibility to pay the mortgage would be on the second name?

So even though there's no "faff" (affordability checks) with this approach, it's important that the secondary owner can still afford it.

Looking at Halifax's website, for example, they state:

If you share your mortgage with another person and want to transfer the mortgage into one name, or if you want to add another name to your mortgage, you'll need our permission. We'll need to complete an application, including affordability checks, and we'll need to see confirmation of income and expenditure for all applicants who'll be on the mortgage.


Affordability checks are fine but the income multiple system would ruin this completely (if that is used?).

[Ozzie Osmond]

Z064life said:

So the mortgage can't be transferred without all the checks etc, but another person (limit of two) can be added without the checks?

Yes, they are always happy to have more suckers on the hook for the entire debt!

Mortgage transfer is theoretically possible but I doubt it ever happens in practice. Best to find a different solution.

[Z064life]

Ozzie Osmond said:

Yes, they are always happy to have more suckers on the hook for the entire debt!

Mortgage transfer is theoretically possible but I doubt it ever happens in practice. Best to find a different solution.

Mortgage transfer would be a like-for-like swap of names, though, if I understand right?

And the easier (not easy) option would be to add an additional name to the mortgage.


Hope that's right.

[-Pete-]

If they give you some or all of the house, any mortgaged part is liable to stamp duty.