FTB but my BF is not: Buy 2ndH hse wt parent guaran & then remortge -avoid stampduty.

A

AOR

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Myself and my boyfriend are planning on buying a house next year.

I'm a first time buyer but he's not which means there'll be a stamp duty hit as we're looking at second hand houses.

One way around this would be for me to buy the house in my sole name and raise the mortgage in my sole name.

The difficulty is that I simply won't get a mortgage big enough for what we want on my salary alone.

I was thinking then that I could get my parents to go guarantor. Then we could buy in my sole name and no stamp duty hit.

Afterwards, in order to get my parents out of the arrangement, we re mortgage - pay off the existing mortgage and take out a new one in my boyfriend's and my name. Does that seem possible? I don't think there's anything illegal in it.

It'd be more a case of tax avoidance than tax evasion.
 
Wouldn't taking out the new mortgage constitute selling half of your share to your boyfriend, and wouldn't there need to be stamp duty paid on that?
 
Don't think so. There's no legal transfer taking place. The property remains in my sole name. We'd just be taking a mortgage out together. Bank isn't going to be too bothered whether he's on title or not as long as they get good security on the property.
 
AoR

Ive expanded your title somewhat but I still dont quite understand your proposal.

Have your considered talking to an accountant and solicitor about your proposal?

aj
Moderator
 
There's not much to it. I buy a house in my sole name by way of a mortgage in my sole name on which my parents act as guarantor. No stamp duty hit cos I'm a FTB.

Couple of months later, my (non-FTB) boyfriend and I apply for a mortgage which will be used to pay off the mortgage on which my parents are guarantor. Effectively I'd be re-mortgaging the property, bringing my boyfriend in as a co-Mortgagor and obviating the need for my parents to be involved in the property at all. No change in legal ownership. No transfer of the property. Property remains in my sole name.
 
No, but I know that it's not always an issue for them. For example, my boyfriend bought a place with his brother a few years ago. Both are on the mortgage but only my boyfriend is on title. Bank's charge is secured against the property as a whole, not against the mortgagors.
 
Fair enough! OP - we were in the same position buying our house - but we were told that if there were two names on our mortgage then there had to be two names on the deed. I really can;t see how your plan would work TBH - but not an expert.
 
AOR said:
Don't think so. There's no legal transfer taking place. The property remains in my sole name. We'd just be taking a mortgage out together. Bank isn't going to be too bothered whether he's on title or not as long as they get good security on the property.
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I dont see how or why the bank would go along with this - it would effectively be putting his name on an unsecured loan if his name is not also on the deeds.

Plus - from your BFs pov - why would he do this if it was possible? Responsible for the debt but no legal standing on the property - he would be mad to go for it.

This type of thing may have been possible back in the days of banks giving out silly money - but I reckon its highly unlikely you'd get away with it in todays climate.
 
truthseeker said:
Plus - from your BFs pov - why would he do this if it was possible? Responsible for the debt but no legal standing on the property - he would be mad to go for it.
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I'm sorry but I have to agree with this post - I know you're in love and will be together forever but I've seen it all go wrong too many times.
 
The rules unfortunately state that if either party in a new house purchase has owned a house before, anywhere in the world, then you have to pay stamp duty.

I have investigated it closely recently as it applies to me, and there doesn't seem to be any way out.
 
RMCF said:
The rules unfortunately state that if either party in a new house purchase has owned a house before, anywhere in the world, then you have to pay stamp duty.
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Not in the case of a guarantor though:

Notwithstanding this treatment, to take account of particular situations, Revenue is prepared to accept that a child, who is a first time buyer, will not be precluded from claiming first time buyer relief where a parent acts as a co-mortgagor in the following circumstances:

  • The transfer of the house is taken in the name of the child.
  • It is the intention of both the child and the parent that the parent is not to take a beneficial interest in the house.
  • The parent has been joined into the mortgage solely at the request of the lending institution for the purpose of providing additional security for the monies being advanced for the purchase.
  • It is not intended that the parent will be contributing to the repayment of the mortgage in the normal course.
Where the four conditions set out above are satisfied, Revenue will treat the parent as effectively acting in the role of guarantor for the loan.

I would be interested to hear what the legal heads on AAM have to say about this proposal.

[broken link removed]
 
I am in a similar position currently,+ in that I own a property and my fiancee would like to buy one, she will be funding this herself so currently she will not be liable for stamp duty. However if she waits until we are married will she have to pay stamp duty on the purchase?
Cheers,
JD
 
AOR said:
There's not much to it. I buy a house in my sole name by way of a mortgage in my sole name on which my parents act as guarantor. No stamp duty hit cos I'm a FTB.

Couple of months later, my (non-FTB) boyfriend and I apply for a mortgage which will be used to pay off the mortgage on which my parents are guarantor. Effectively I'd be re-mortgaging the property, bringing my boyfriend in as a co-Mortgagor and obviating the need for my parents to be involved in the property at all. No change in legal ownership. No transfer of the property. Property remains in my sole name.
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I doubt it will work.

Banks have probably changed their policy on joint applicants (since the good times).

Also in these times, when you go and look for the second mortgage, even if you get it, it's possible that the banks valuation of your house will have gone down and you may not be able to raise the finance to clear the first mortgage.
 
truthseeker said:
I dont see how or why the bank would go along with this - it would effectively be putting his name on an unsecured loan if his name is not also on the deeds.

Plus - from your BFs pov - why would he do this if it was possible? Responsible for the debt but no legal standing on the property - he would be mad to go for it.

This type of thing may have been possible back in the days of banks giving out silly money - but I reckon its highly unlikely you'd get away with it in todays climate.
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The loan is still secured against the property regardless of whether his name is on title. From the bank's point of view, we're jointly and severally liable for mortgage repayments. If he defaults, then it's treated the same as if I defaulted. In that scenario, the bank can still move to take up their security on the property regardless of whether my boyfriend has a legal interest in it.

Secondly, you're right, he'd have no legal standing. He'd have to trust me. We'd probably be getting married shortly afterwards though in which case he'd be protected.
 
plant43 said:
Also in these times, when you go and look for the second mortgage, even if you get it, it's possible that the banks valuation of your house will have gone down and you may not be able to raise the finance to clear the first mortgage.
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That's a good point. I knew from the outset this really wasn't a runner. Just interested in people's views though.
 
AOR said:
The loan is still secured against the property regardless of whether his name is on title. From the bank's point of view, we're jointly and severally liable for mortgage repayments. If he defaults, then it's treated the same as if I defaulted. In that scenario, the bank can still move to take up their security on the property regardless of whether my boyfriend has a legal interest in it.
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I dont think this is correct. I do think this kind of thing used to go on but that the loophole has been closed.

I would imagine that from the banks point of view they would want to see both names on the title if both names are on the mortgage. What you are effectively proposing is that someone takes out a mortgage on a property they dont have any legal title to - how would a bank allow that? What would happen if the person just stopped paying? The bank couldnt repossess the property as the person doesnt legally have any title to it? So how would the bank have any security on the loan in that case?
 
Both of you will have to go on the title, the only scenarios where the lenders will consider joint mortgage sole title are in the cases of

1) Guarantor going on mortgage as you outlined above.
2) Site gifted to one of the mortgage applicants.

as truthseeker says the other loopholes have been closed.

www.moneybackmortgages.ie
 
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