Can You Sell Half of Your Property to Your Son or Daughter?
Answered on 16 May 2023 by Nick Mendes
Where can my son get a mortgage to buy a share of our house? We would use that money to move into a smaller property and just be on the deeds as joint owners with our son on the original property. The idea being to help our son and his family obtain a large enough house for their family and for us to downsize.
Can You Sell Half Your House?
You cannot sell half of your house to come off the mortgage, but still stay on the title deeds. A mortgage lender won’t accept this because if you are not a party to the mortgage, but are on the title deeds, then in the event that the mortgage was defaulted on, the lender would be unable to gain possession of the property.
What are the options?
Your main options are to apply for a transfer of equity, where you are adding your son to the mortgage and deeds, and staying on yourselves. You can either approach your existing lender for permission or can look to remortgage to a new lender. The lender will look at the overall affordability of the loan and will take into consideration the level of income your son earns, as well as your current income and future plans too.
As part of the transfer you would need to take legal advice as to whether you should get the ownership of property as tenants in common with a defined split between you and your son to be determined.
The other option would be to sell the property to your son at below market value and retain a legal interest in the property. This would be a concessionary sale where you gift equity in the property to the family member so they can afford to buy it on a smaller mortgage. You would not be on the title deeds in this scenario but could still retain a legal interest in the property. You would need to take legal advice on the best way to do this and arrange the protection of your retained share. Not every lender will look at this type of scenario, however as John Charcol is an independent, whole of market broker, we have excellent relationships with those lenders who should be able to help.
It would be worthwhile to discuss your enquiry in more detail, and if you would like to do so, then please submit an enquiry and we'll arrange for you to speak to one of our consultants.
Ask The Mortgage Experts answers 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.