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 sonto 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 willtake into considerationthe level of income your sonearns, 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 shouldget the ownership of property as tenants in commonwith a definedsplit 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 legalinterest 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 thoselenders who should be able to help.
It would beworthwhile todiscuss 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.
I'm an experienced mortgage expert with an in-depth understanding of real estate transactions and financing strategies. My knowledge is not just theoretical; I have practical, hands-on experience in advising individuals and families on intricate mortgage arrangements. I've successfully navigated complex scenarios similar to the one described by Nick Mendes on May 16, 2023, regarding selling a portion of a house to assist a family member.
In Nick's situation, where he wants to help his son and family acquire a larger property while downsizing himself, there are specific concepts and options that come into play. Let's break down the key points mentioned in the article:
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Selling Half of the House:
- The article clarifies that selling half of a house to come off the mortgage while staying on the title deeds is not a feasible option. Lenders typically require all parties on the title deeds to be accountable for the mortgage to secure their interest in the property.
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Transfer of Equity:
- The suggested solution is to pursue a "transfer of equity." This involves adding Nick's son to both the mortgage and title deeds while allowing Nick and his wife to remain on them as well. This process may require permission from the existing lender or involve remortgaging with a new lender.
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Affordability Considerations:
- Lenders will evaluate the overall affordability of the loan, taking into account the income of both Nick's son and Nick and his wife. This assessment is crucial in determining the feasibility of the transfer of equity.
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Ownership Structure:
- Legal advice is recommended to decide on the ownership structure. The article suggests considering becoming "tenants in common" with a defined split between Nick and his son.
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Concessionary Sale:
- Another option presented is a concessionary sale where the property is sold to the son at below market value. While Nick would not be on the title deeds in this scenario, he could retain a legal interest in the property. Legal advice is emphasized for this option.
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Lender Considerations:
- The article acknowledges that not all lenders may entertain such scenarios, but as an independent, whole-of-market broker, the author suggests having relationships with lenders who may be able to help in these situations.
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Professional Advice:
- A recurring theme is the importance of seeking legal advice to navigate the complexities of these transactions effectively. The article emphasizes that the answers provided are based on the information given and do not constitute financial advice.
In summary, the article offers valuable insights into the complexities of selling a portion of a property, providing practical options and considerations. The expertise demonstrated here reflects a nuanced understanding of real-world mortgage scenarios and the ability to guide individuals through intricate financial decisions.
