my mother in law is selling her £110,000 house to me for £80,000. Can i use the £30,000 equity of the house as my deposit for my new mortgage? If not could she sign over the house with its debt to me and I re-mortgage it to pay her and her debt?
Thanks
A couple of issues here:
1) If the house is truly worth 110K, you are getting it too cheap and the tax man will assume that this is to hide a gain. Also, stamp duty is owed on the actual value, not the discounted rate you want to pay.
2) Assuming that the current fair market price of the house is 80K, there is no equity. If the value is 110K, then there still is no equity as far a mortgage lender is concerned because the maximum that you can borrow is set as a percentage of the lower of the sale price or value. So if you can buy it at 80K, the max. mortgage will be, say, 90% of 80K and you will have to come up with the 8K yourself.
In short, you can never have the mortgage lender view any discount in the purchase price as the down payment.
yes.
but get rid of your debt asap.. Look at all the western countries in the world.. they are in debt and about to cause the big depression. Don’t borrow money!!!!
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It depends on the way the mortgage was initially set up. A FHA mortgage can be assumed (taken over) and you would owe the current balance. Most mortgages won’t allow a take over and the owner must occupy the home.
References :
Personal experience
A couple of issues here:
1) If the house is truly worth 110K, you are getting it too cheap and the tax man will assume that this is to hide a gain. Also, stamp duty is owed on the actual value, not the discounted rate you want to pay.
2) Assuming that the current fair market price of the house is 80K, there is no equity. If the value is 110K, then there still is no equity as far a mortgage lender is concerned because the maximum that you can borrow is set as a percentage of the lower of the sale price or value. So if you can buy it at 80K, the max. mortgage will be, say, 90% of 80K and you will have to come up with the 8K yourself.
In short, you can never have the mortgage lender view any discount in the purchase price as the down payment.
References :