New partner on mortgage/stamp duty
Discussion
Advice welcome, as I'm functionally illiterate when it comes to financial matters
In short, my 'new' partner and I are exploring the best options for raising capital in order to build an extension to my (our) house. I suspect the extension, if two storey as envisaged, may cost near 150k. Don't have to borrow all of that, as we have savings, and her dad would probably help out a bit. But lets say around 120k for the sake of argument.
Our circumstances:
Me. Homeowner. Roughly 250k mortgage on a 480-500k value property. As far as borrowing is concerned, that's about as far as I want to go. Mortgage is with Nationwide, fixed until August 2022
Her: Owns a flat with a value of about 160K. She has about 80k equity in that at present. She would prefer, if possible, to keep it as an investment/property for our daughter when the latter is older. I support her position on that. She does however also have a half share of her late mother's house, with that share worth roughly 150k. Somewhat problematically the property is presently inhabited rent free by the mother's then partner, according to the mother's wishes. He has made noises about moving out at some point, but has not specified a date. Could be years. Partner unwilling to hoof him out as he has been like a father figure to her in the past (and is skint). However, the money will be freed up at some point.
So, with us for the moment unwilling/unable to release the equity from either (or both) of her properties, one alternative is for her to join me on the mortgage. She earns about 50k in a stable job so she's a good prospect for a lender if we were to go for a joint mortgage.
The primary question at present is stamp duty. It will obviously cost a fairly significant amount for her to be added to a mortgage if, as is the case, she is already a property owner (presuming her flat would be considered a primary residence?). What I don't know, or rather can't work out, is the amount it would cost her in stamp duty to be on a mortgage with me? Would she be required to pay it on the basis of the whole value of my property? On the difference in equity between its purchase and now? These may seem like a stupid questions, but when it comes to these things I am quite a stupid person.
Cheers
In short, my 'new' partner and I are exploring the best options for raising capital in order to build an extension to my (our) house. I suspect the extension, if two storey as envisaged, may cost near 150k. Don't have to borrow all of that, as we have savings, and her dad would probably help out a bit. But lets say around 120k for the sake of argument.
Our circumstances:
Me. Homeowner. Roughly 250k mortgage on a 480-500k value property. As far as borrowing is concerned, that's about as far as I want to go. Mortgage is with Nationwide, fixed until August 2022
Her: Owns a flat with a value of about 160K. She has about 80k equity in that at present. She would prefer, if possible, to keep it as an investment/property for our daughter when the latter is older. I support her position on that. She does however also have a half share of her late mother's house, with that share worth roughly 150k. Somewhat problematically the property is presently inhabited rent free by the mother's then partner, according to the mother's wishes. He has made noises about moving out at some point, but has not specified a date. Could be years. Partner unwilling to hoof him out as he has been like a father figure to her in the past (and is skint). However, the money will be freed up at some point.
So, with us for the moment unwilling/unable to release the equity from either (or both) of her properties, one alternative is for her to join me on the mortgage. She earns about 50k in a stable job so she's a good prospect for a lender if we were to go for a joint mortgage.
The primary question at present is stamp duty. It will obviously cost a fairly significant amount for her to be added to a mortgage if, as is the case, she is already a property owner (presuming her flat would be considered a primary residence?). What I don't know, or rather can't work out, is the amount it would cost her in stamp duty to be on a mortgage with me? Would she be required to pay it on the basis of the whole value of my property? On the difference in equity between its purchase and now? These may seem like a stupid questions, but when it comes to these things I am quite a stupid person.
Cheers
btdk5 said:
Stamp duty relates to ownership of property. Nothing to do with the mortgage.
You will be taking on this risk of being liable for a mortgage on a property you don’t own. But there will be no extra stamp.
I would take legal advice on this rather than forum advice.You will be taking on this risk of being liable for a mortgage on a property you don’t own. But there will be no extra stamp.
OP needs to get comfortable on the 3% additional property surcharge depending on what percentage of his property his partner ends up owning and what the consideration for that share is. Taking on a joint mortgage liability can be seen as consideration.
NickCQ said:
I would take legal advice on this rather than forum advice.
OP needs to get comfortable on the 3% additional property surcharge depending on what percentage of his property his partner ends up owning and what the consideration for that share is. Taking on a joint mortgage liability can be seen as consideration.
Always get advice, but isn’t the solution to mortgage out the parents old property. OP needs to get comfortable on the 3% additional property surcharge depending on what percentage of his property his partner ends up owning and what the consideration for that share is. Taking on a joint mortgage liability can be seen as consideration.
OP name on the mortgage for affordability but not the deeds, doesn’t live in the property so no reason for any consideration towards stamp.
Definitely seek professional advice but as far as I'm aware no stamp to pay between spouses, could be worth considering if you're thinking of it anyway. Not that I'm advocating marriage solely on the basis of tax savings 
bear in mind though as a married couple you are only entitled to one main residence between you.
bear in mind though as a married couple you are only entitled to one main residence between you.Rameez-v57b3 said:
Not sure if the point is being missed here, but if your extending a house and no building a new dwelling, there would be no stamp duty to pay? As it would be an extension to the current house your not buying a new property....
Might help to actually read what the OP is saying... OP considering adding OH to mortgage (which means she needs to be on the deeds) in order to fund said extension.Sarnie said:
They aren't..........they need to be uniform...........
Not true - you just need the right formsProperty can be in a sole name and mortgage in joint names - there’s no extra costs or fees - you just need to sign the right disclaimers that you understand the risks etc.
Some lenders may have policies, it it’s not uniform or a legal requirement.
I’ve done it recently - property 100% owned by my wife, joint mortgage - as she has no income - First Direct was the lender
BaldOldMan said:
Not true - you just need the right forms
Property can be in a sole name and mortgage in joint names - there’s no extra costs or fees - you just need to sign the right disclaimers that you understand the risks etc.
Some lenders may have policies, it it’s not uniform or a legal requirement.
I’ve done it recently - property 100% owned by my wife, joint mortgage - as she has no income - First Direct was the lender
My response is in response the OP's post, not your circumstances or requirements which are different.......JMSP mortgages are available but are not indicative of the market........Property can be in a sole name and mortgage in joint names - there’s no extra costs or fees - you just need to sign the right disclaimers that you understand the risks etc.
Some lenders may have policies, it it’s not uniform or a legal requirement.
I’ve done it recently - property 100% owned by my wife, joint mortgage - as she has no income - First Direct was the lender
I didn’t say they were indicative of the market. All I said was that it’s possible if that’s what you want to do and both of you fully understand the risks and what you’re signing up for.
You need to be clear on your requirements - there may be other reasons to go joint on the ownership and accept the cost of doing that, but as others have stated, ownership & mortgages are different things.
I completely agree that to bang into a price comparison site, you need to be vanilla but it is definitely not a requirement to have the ownership and mortgage aligned.
You need to be clear on your requirements - there may be other reasons to go joint on the ownership and accept the cost of doing that, but as others have stated, ownership & mortgages are different things.
I completely agree that to bang into a price comparison site, you need to be vanilla but it is definitely not a requirement to have the ownership and mortgage aligned.
BaldOldMan said:
Not true - you just need the right forms
Property can be in a sole name and mortgage in joint names - there’s no extra costs or fees - you just need to sign the right disclaimers that you understand the risks etc.
Some lenders may have policies, it it’s not uniform or a legal requirement.
I’ve done it recently - property 100% owned by my wife, joint mortgage - as she has no income - First Direct was the lender
It's interesting to know that this is possible, but as you say it's very much the exception and not the rule. Making a pure assumption here but I'd guess for that to be accepted you'd need to have a lot of equity in the property and it is quite a risk for the bank to take on as it's pretty much just an unsecured loan then.Property can be in a sole name and mortgage in joint names - there’s no extra costs or fees - you just need to sign the right disclaimers that you understand the risks etc.
Some lenders may have policies, it it’s not uniform or a legal requirement.
I’ve done it recently - property 100% owned by my wife, joint mortgage - as she has no income - First Direct was the lender
No - it’s still a secured loan on the house.
The owner has to acknowledge that their house is at risk if the other person decides to walk away and stop paying.
The additional mortgagee has to acknowledge no rights to occupation and they are lower down the list of creditors than the lender if there is a default.
The lenders are worried about the risk mis-selling so they ram it home - I even had to sign an additional for agreeing that they’d strongly recommended I had a solicitor explain it all to me before signing (at my cost) - and I’d declined.
The owner has to acknowledge that their house is at risk if the other person decides to walk away and stop paying.
The additional mortgagee has to acknowledge no rights to occupation and they are lower down the list of creditors than the lender if there is a default.
The lenders are worried about the risk mis-selling so they ram it home - I even had to sign an additional for agreeing that they’d strongly recommended I had a solicitor explain it all to me before signing (at my cost) - and I’d declined.
How to finance the build seems to be a secondary issue to how you manage your joint finances currently and how you want to do that in the future.
It seems to me that you're saying that you solely own your main residence at the moment, but that you want to jointly finance the extension. However, the majority of the finance for the extension is coming from your partner either through money from her family or from her income (however the loan is secured).
If I were her, I would want a stake in the improved property if you aren't married. In that case, there would potentially be stamp duty to pay irrespective of how the stake is funded.
If your partner takes a stake in the property in return for either taking on part of the mortgage or paying for equity by releasing money from her other properties then there is an equity consideration, and potentially stamp duty to be paid depending upon whether it's over the stamp duty threshold.
So as long as the amount of money that your partner gives (either in terms of her share of the mortgage or cash for the build) is less than the threshold then there will be no stamp duty to pay. Interestingly, I don't think it matters what share of the property you give her.
Whether you finance the extension from a remortgage (new lender, extended borrowing, second mortgage) or from drawing down equity from one or both of her other properties should be based first upon minimising the total cost (including stamp duty). I imagine that the interest rate you would get on your primary residence would be lower than that on the other properties, which I presume would be classed as BTL as they are occupied? And the second consideration would be the ease i.e. effort of of getting a mortgage in joint names without joint ownership.
Again, if she's willing to effectively give you money without anything in return then no stamp duty would be paid.
Thanks for that, much appreciated.
The rather salient point, which I forgot to mention but which others raised, is that I would like to give her a stake in the property in return for her committing a significant lump of capital/borrowing, hence me tending toward thinking of the mortgage route as a way of doing that.
The rather salient point, which I forgot to mention but which others raised, is that I would like to give her a stake in the property in return for her committing a significant lump of capital/borrowing, hence me tending toward thinking of the mortgage route as a way of doing that.
Read the responses again - the mortgage is only the borrowing - not the ownership - they are 2 different things.
What you want to do (I think) is transfer some of the equity - albeit alongside a cash injection and remortgage.
For that, you need a solicitor / conveyancer as it’s kind of the same process and expense as when you buy a property.
To change the equity ownership, you need the agreement of your mortgage holder - though you’d probably be able to sync it up with your re-mortgage.
There may also be tax implications doing this outside or marriage / civil partnership - and you’ll likely want wills drawing up at the same time......
Either way, i’d say talk to a property solicitor - the mortgage is likely the easy bit.
What you want to do (I think) is transfer some of the equity - albeit alongside a cash injection and remortgage.
For that, you need a solicitor / conveyancer as it’s kind of the same process and expense as when you buy a property.
To change the equity ownership, you need the agreement of your mortgage holder - though you’d probably be able to sync it up with your re-mortgage.
There may also be tax implications doing this outside or marriage / civil partnership - and you’ll likely want wills drawing up at the same time......
Either way, i’d say talk to a property solicitor - the mortgage is likely the easy bit.
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