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Ask JGM Your Own Question
JGM
JGM, Solicitor
Category: Property Law
Satisfied Customers: 11139
Experience:  30 years experience in property law.
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I currently have a mortgage, interest only, contract ends 2016

Customer Question

I currently have a mortgage, interest only, contract ends 2016 (85000 owing).
I am considering :-
A. Equity release
B. Selling to repair outstanding loan.
C. Giving the house equity to my son, who then takes out a Buy to let mortgage whilst I then remain in the property. This is my preference! Are you able to give me the legal/non legal aspect of this scheme? Thankyou
Submitted: 2 years ago.
Category: Property Law
Expert:  JGM replied 2 years ago.
Equity release is likely to be expensive alhough there are lenders that will give you a lifetime interest only loan.
A sale is a matter for you to decide in the contact of your own personal circumstances.
Your preferred route is a good one. The advantages are you keep your house and your mortgage is repaid from the buy to let mortgage taken out by your son.
Two points to bear in mind. If the property substantially increases in value over the course of his ownership he could have a capital gains tax liability. Secondly, if your estate is likely to exceed the inheritance tax limit, you should pay a market rent to your son so that the property transfer is not treated by HMRC as a gift with reservation during the seven years following the transfer and potentially subject to IHT were you to die during that period.
Happy to discuss further.

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