Q My wife and I have a buy-to-let property. We would like to add on to this mortgage our children, who are 26 and 31 years of age. Is it possible? If not how can we transfer this property into their names without heavy fees or rather what would be the best way to transfer this property into their names?
This used to be our home and it’s where both our children grew up so the house is also of sentimental value to them. DN
A Yes, it is possible to add your children to the mortgage but why do you want to? If you did add them to the mortgage – assuming that your lender was happy with that – they would become liable for the mortgage debt if you and your wife were unable to pay it. Adding them to your buy-to-let mortgage could also scupper their chances of getting a mortgage of their own, as – judging by their ages – I suspect that neither of them is yet on the property ladder. If they are not, adding them to your mortgage would also stop them from being able to claim first-time buyer relief from stamp duty land tax (SDLT) when they get round to buying their first home. And it’s a relief worth having as it exempts first-time buyers from paying SDLT on the first £425,000 of a property costing up to £625,000. The SDLT on the portion between £425,000 and £625,000 is charged at 5%.
If I have misjudged your children and they and/or one of them do already own their own home, being added to your buy-to-let mortgage would be seen to be acquiring a second property and so the higher rate of SDLT – standard rate plus three – would apply to the “consideration given”. This is the technical term for the amount of the mortgage taken on by your children (or in the event of a purchase, the amount paid).
If you want your children to have your former family home, but you don’t want such a gift to detrimentally affect their financial positions, the simplest thing to do would be to leave it to them in your will. Even simpler would be to talk to them to find out if they are really as attached to the property as you think. It could be that they might be thrilled if you sold the house and split the proceeds between them. This could also be a way of saving inheritance tax if you live for at least seven years after making the gift.