Family Sales

Posted on 23 February 2011 by johanna hyland

Can I sell my house to my 3 children for the price of the mortgage outstanding and not the value of the house - what are the cost implications?


You can sell your house to your children for the amount of the mortgage, but this must coincide with either the redemption or transfer of the mortgage into your children's names.

If you are going to stay living in the property then many Lenders are not keen to lend. This is mainly due to the potential problems in evicting you should the property be taken into possession. That said, there are Lenders who will consider the proposition as long as no lifetime tenancy is created, vacant possession is available at the time of completion and subject to your children being able to afford the monthly payments in addition to any existing debts they may have.

You also need to be aware that there are potential Capital Gains and Inheritance Tax implications and you need to get specialist tax advice on these. You will also need legal advice and a Solicitor should be able to help you with all these areas.

As well as tax and legal costs there will be fees payable to your existing Lender if you transfer the current mortgage or new application and valuation fees if your children take out a new mortgage. Depending on the mortgage product you are on their may be early repayment charges too.

I recommend that you speak to your current Lender to see if they will accept the proposal and then speak to an independent mortgage adviser about the chances of your children raising a mortgage in their joint names.


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.

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