Adding someone to a mortgage

K

Kerryman

Registered User
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13
Hi All,

Just wondering if anyone can advise us with this situation.

I bought a house in Jan 2005. The house was worth 168,000.
I have been paying the mortgage by myself since then.
But now, my girlfriend would also like to own the house and to go 50/50 on the mortgage repayments. As I have already spent 30,000 on the house outside of repayments, she is going to give me 15,000 and start paying 50% of the mortgage.

I have asked the finance company for the forms, as this is technically a remortgage.

Is there anything else we need to consider, that we just haven't thought about?

Also, what is the best way we can guarantee each other, if it all goes horribly wrong between us, that we get back our fair share of what we put into the mortgage?

Thanks,
Kerryman.
 
Re: Adding someone to a mortgage.

You should remain tennants in common that is a legal concept that in death the assets would pass under the terms of the will rather than to the surviving tennant...you will need a sound legal agreement ensure your solicitor prepare one for and you are happy with it

secondly, your gf is techically buying a share of the house from you there may be capital gains tax issues for you and stamp duty for her

lastly how much of an interest is she getting? 50%? remember she has paid nothing off the mortgage so far although she is contributing towards half of the additional expenditure
 
Re: Adding someone to a mortgage.

Personally I think you are mad. If your girlfriend buys half of your house, she loses her first time buyer status and will have to pay stamp duty on any future property that she makes. The only benefit to her is that she will be able to claim mortgage interest relief. However this is only worth 800 per year.
 
Re: Adding someone to a mortgage.

I am in the similiar position,
Although the mortgage is 315K and I have paid 14K in stamp duty and 50 in terms of investment, gf hasnt paid anything toward house to date and the gf wants on the mortgage
I also wondering about the implications in terms of tax due. Will she be hit with stamp duty and gift tax?

OP I dont think you will be hit for stamp duty being under threshold
It is 'gift tax' that I think OP's gf will be hit with, as effectively you are gifting her half of the house.
My understanding is If the house has gone up in price its the difference between mortgage and current valuation price that your GF would have to pay, also I think it would be at 20%
 
Re: Adding someone to a mortgage.

and will have to pay stamp duty on any future property
Click to expand...

Only applies if the FTB is buying a second hand property

Confusion:
As you are gifting her half the house SD is payable on half the value of the house at the time of the transfer.

Gift tax - I think your understanding is correct but less treshold of 23,908 @ 20%

Kerryman
You need to change the names on the deeds of the house which the finance company holds. They may charge a small amount to release.

Best to see a solicitor about the deeds and draw up an agreement in the event of splitting up etc. You can ringfence your investment (index this if possible) (Ask about cost before going ahead)
http://www.askaboutmoney.com/showthread.php?t=21519&highlight="tenants+common"
 
Re: Adding someone to a mortgage.

asdfg said:
You need to change the the names on the deeds of the house which the finance company holds. Then may charge a small amount to release.
Click to expand...

I think OP was talking about putting his gf on title deeds as well as mortgage (it wouldnt be in her interst just to be on mortgage) Yes asdfg is correct in putting someone on title there is a fee, You would have to contact your bank in writing requesting a name to be added and the fee is around 160euro,
But I thik the OP major concerns was fact he may have overlooked some other issues regarding taxation (be it gift or stamp duty or capital gains)
 
Re: Adding someone to a mortgage.

asdfg said:
Only applies if the FTB is buying a second hand property

Confusion:
As you are gifting her half the house SD is payable on half the value of the house at the time of the transfer.
Click to expand...

She will not have to pay any SD on this if she is a FTB. Also there are no gift tax implications as she is paying him for an interest in the house.
 
Re: Adding someone to a mortgage.

Art said:
She will not have to pay any SD on this if she is a FTB. Also there are no gift tax implications as she is paying him for an interest in the house.
Click to expand...

Yes I think that applies in Kerryman's case as his house was new?

But my house was a second hand house at time of purchase, which I paid stamp duty on of circa 10K and paid 50K as deposit and I think this is different. Currently house worth 450K and mortgage of 315K

My Gf can either
a) go on my mortgage direct
b) get a mortgage herself, for half of 315k and pay off half of my mortgage (thus taking 50% stake)

But if she does a) She would be have to pay stamp duty, as renvenue would be informed and possible gift tax on the 50K and property

OR b) no Stamp duty as below threshold this way, but pay gift tax on the initial investment

are my assumptions correct?
 
Re: Adding someone to a mortgage.

So it should be just like applying for another mortgage, with the usual legal fees etc.

Thanks for bringing up all these points, it's opened up alot of things we need to ask before we go and do this.

Cheers,
K
 
Art so as to avoid confusion I was replying to your post where you said

If your girlfriend buys half of your house, she loses her first time buyer status and will have to pay stamp duty on any future property that she makes
Click to expand...
The bold is the element I originally took out of your post and I said
Only applies if the FTB is buying a second hand property
Click to expand...
should perhaps have added in the future. I was not talking about this tread.

Also there are no gift tax implications as she is paying him for an interest in the house.
Click to expand...

My understanding is that there is a gift involved i.e. the difference in the value of the house now which takes into account improvements and the outstanding mortgage.

Say house bought for 300K with mortgage 250K
Value of house now 350 mort outstanding 200K

Gift of half of 150K i.e 75K to girlfriend Tax payable on 75K - theshold 30K approx = 45K @ 20% = 9K
 
Asdfg

Sorry - I read the post in a hurry. You are quite right - there would be gift tax implications assuming an increase in the value of the house

Aplologies again
 
there would be gift tax implications assuming an increase in the value of the house
Click to expand...
I think there would also be gift tax even if there is no increase in the value of the property

Say house bought for 300K with mortgage 250K
Value of house now 300K (no increase) Mort outstanding 200K

Gift of half of 100K i.e 50K to girlfriend Tax payable on 50K - theshold 30K approx = 20K @ 20% = 4K
 
So in our case:

Original cost of house: 168,000 mortgage: 156,000
Value of house now: 200,000 outstanding mortgage: 152,000

Gift of half of 48,000 => 24,000 @ 20% = 4,800 payable

Is this correct?

If so, is there anything else we need to consider?

Thanks for the help so far.
 
Sorry just spotted the threshold of 30,000. So we should not have to pay any tax as I am "gifting" her with 24,000.
 
Kerryman you would pay 18.4 euro in gift tax Provided the house value doesnt rise and stays in and around 200K, lucky you nice escape


Just looking at it with my figures
value of 450K - mortgage 315K leaves 116K

So 116K / 2 leaves 58K
So minus 23908 from 58K leaves 34,092 which gift tax is payable on at 20%
So I'll (my gf) will be hit for 6818.4 in gift tax for the privilage of adding her to mortage and title. Also solicitor fees and fee of adding name to mortgage circa 160. A Scam!!!
 
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