Can I transfer part of my mortgage equity to my family?

Posted on 16 January 2008

Hi Katie,

My partner and I have separated happily.  The only trouble is that I own the house that we both live in with our two kids. I would love for them to stay in the house, but I would like some of the equity out of the house. She only works 12 hours a week so she would not be able to afford the mortgage. Is there a way of her family buying my share in the house and then transferring the mortgage to another family member and her renting it back from them? 

Hi Ian,

It sounds like what you are trying to ultimately achieve is selling your part of the property to someone in your partners' family, so that they can rent it to your ex and the children.  Strictly speaking there is no mortgage for this, a buy-to-let half in her name and half in that of her relative, would not allow her to live in it.  A residential mortgage might be more suited, but you would need to find a relative who does not have their own residential mortgage, or at least has one so small that they could theoretically 'afford' to be on a second property with your partner.  The relative would not be able to 'let' the property per se, but a private financial arrangement would have to be agreed.

To raise some money, you would need to work out what mortgage is owed, add on whatever cash you want, then that would be their new mortgage amount.  At the point of the remortgage, the solicitor would carry out the 'transfer of equity' which takes you off the mortgage and property deeds, and puts the relative on, and you receive your lump sum.  Please understand that this takes you off the property, so price your share well.

This sort of mortgage is not unreasonable, but it is the sort of scenario where your partner and the new relative will need the matter agreed on an individual basis with the underwriter of a lender. Please ask your partner and their chosen relative to telephone/ visit a broker who will represent them and get the case agreed with a suitable lender.  Charcol can be reached on 0800 358 5560, they search the whole of the market and don't charge a fee for their advice.

Category: Separation or Divorce

 

Answers provided in response to Ask Bea are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not neccessarily represent the views, positions, strategies or opinions of Charcol Limited. All comments are made in good faith, and neither Charcol Limited nor Bea will accept liability for them.

We recommend you seek professional advice with regard to any of these topics where appropriate.

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