Transfer of Property

[propnerd]

I can no longer afford the mortgage on my home. My parents are willing to take the property over as a buy to let and give it back to me in a few years when I can afford it again, but due to their age and now low income the mortgage company will not let me transfer the property over, even though the rent will cover the mortgage. I have been advised to set up a company for my parents and do it like this, however, I would not have the first idea of home to go about this!! I am really stuck at the mo, so any advice/help would be greatly appreciated. Thanks

 

[josephc247]

I can no longer afford the mortgage on my home. My parents are willing to take the property over as a buy to let and give it back to me in a few years when I can afford it again, but due to their age and now low income the mortgage company will not let me transfer the property over, even though the rent will cover the mortgage. I have been advised to set up a company for my parents and do it like this, however, I would not have the first idea of home to go about this!! I am really stuck at the mo, so any advice/help would be greatly appreciated. Thanks

Several years ago, mortgage providers have been quite lenient in lending money to senior citizens. It's quite a short list but they did offer age-related interest-only mortgages to retired borrowers. Loans were usually repaid through the proceeds of selling the property. But today has been different. Age regulations have been tighter. Most mortgage lenders will not lend to borrowers ages over 65 (or 70) though a few will stull lend up to the age of 75. You might still find it worth shopping around for other mortgage providers for your parents if you've only asked your current lender about it. I believe you can still stumble upon one via the Internet.

You can also scout for mortgage brokers (although their referral fees/commissions may be a little pricey) who can persuade lenders to relax their age restrictions and lend up to the age of 85. You can also try Googling for Mortgage for over 60s or 70s. Using a broker and agreeing that you'll act as a guarantor, you could improve your parents' chances of getting a mortgage in their name.

I'd take it that you asked about a buy-to-let mortgage already for your parents, but there are special rules that apply to this because a family member will live in the property (and presumably not pay rent).

With a commercial buy-to-let mortgage most lenders take rental income into account when assessing the loan application, whereas with a buy-to-let with a family member living in the property, your income would be taken into account instead and it must be sufficient to support the whole of the mortgage.

As for setting up a company in your parents name and listing your home as one of the company's asset (being a rental property),lenders will see it as a commercial buy-to-let property (which brings us back to the paragraph above. Of course when loan takers will present the company to their lenders, their other assets and income will still be verified to see how much they can lend. It's quite a complex process.

I would also suggest that you ask solicitors around for proper advice on this. There are solicitors who are willing to give free advice on how you can go about setting up a company in your parents' name.

I hope this helps and that things go well for you soon.

Cheers!
Joseph