Transfer of Title & Raising Capital
Posted on 13 September 2011
I have a mortgage on my current house. I have the opportunity to move in with a relative who is williing to sign over their house to my family as part of a future inheritance. My plans would be to rent out my current house and borrow money on the new house to build an extension. There is no mortgage on the new house.
Is this possible to borrow the money and would it be on similar rates to my current mortgage?
Whilst in theory this is possible and current residential rates should be available, I think that in practice you will having trouble achieving this. To start with there must be a proper legal transfer and lending will be restricted to the stamp duty value, many lenders will not consider lending at all if your relative is staying in the property and others will not consider lending until you have owned the property for at least 6 months.
Depending on the size of your current mortgage, the property value and the anticipated rental income it may be easier to borrow the money you need against your existing property? As this would be a Buy to Let mortgage the rates would be slightly higher but it is possible that you may be able to offset the interest paid against the rental income received and reduce you tax bill. We can not advise you on this aspect and you would need to seek independent advise from a taxation specialist.
I believe we can help you explore the different mortgage options and that you would benefit from speaking to one of our independent mortgage advisers. Please call 0844 346 3672, tell the consultant the date and title of your question and they will then be able to advise you.
Answers provided in response to Ask the experts 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 necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.
We recommend you seek professional advice with regard to any of these topics where appropriate.