Taking over a mortgage

Don Joe

If a parent owns a couple of houses which they are paying a mortgage on for over a decade and wishes to gift a house to a child and child's spouse, leaving them pay the remaining balance of the mortgage, how can this work?

Child and spouse already paying mortgage on their own house which they would seek to retain and rent out.

Does parent need to sell house to child and child's spouse (for whatever balance clears parents existing mortgage on house, which is well below market rate)? Presumably bank cannot see just changing name on mortgage.

Surely if you're going to be paying the mortgage then it's not a gift and you're buying the house from them.

Zenify

If the mortgage is less than the market value of the property than the balance is counted as a gift. Gifts can involve the tax man but there are thresholds and exemptions, especially for children. Other than that no issues I can think of if the bank is willing to do it. I wouldn't see it as swapping the name on the mortgage but them taking out a new mortgage to pay off your one.

Lefty Bicek

Joziah High Wisecrack wrote: »

Surely if you're going to be paying the mortgage then it's not a gift and you're buying the house from them.

I would consider the equity that is in the property to be a gift.

Selling me something for 'x', which is worth '2x' or '3x', assuming no strings attached, is a gift and if accepted, should be accepted with gratitude.

Whether or not Revenue sees it like that, I have no idea, and wouldn't care as long as their view were not adversarial to my interests.

Don Joe

Lefty Bicek wrote: »

I would consider the equity that is in the property to be a gift.

Selling me something for 'x', which is worth '2x' or '3x', assuming no strings attached, is a gift and if accepted, should be accepted with gratitude.

Whether or not Revenue sees it like that, I have no idea, and wouldn't care as long as their view were not adversarial to my interests.

Correct. I see it as a gift also, not as a typical sale as another poster said. House would be 50% ish market rate.

You will need legal and tax advice.

You will need a second mortgage of at least the outstanding amount of the current mortgage.

Will you be able to borrow the sum of both mortgages?

Wesser

surely you just take out a mortgage and buy the house off of them and pay them whatever they want and they pay off the balance on their mortgage.

Fol20

Let’s say the house is worth 300k and your current mortgage is 100k.

In this situation. Your children will need to apply for their own mortgage for the the house to the value of around 100k.

From a taxation point of view, I would be looking into any tax due from your children’s side as you are gifting them 200k. As long as they have never been gifted something in the past. 200k would be under the threshold but it’s better to consult a tax advisor and solicitor on this.