Liable for 3% 'second home' SDLT kicker?

Yes, this is why I think it's best to get the current joint mortgage sorted. Better than paying it out and hoping for it back, I think. Thanks.

Yes, this is why I think it's best to get the current joint mortgage sorted. Better than paying it out and hoping for it back, I think. Thanks.

C & P

If you replace your main home

You won’t have to pay the higher rates if you sell your main home on the same day you buy your new home.

If you sell your main home after you purchase your new home you’ll need to pay the higher rate. You can claim a refund of the higher rates if your old home is sold within 3 years of buying your new home.

You can claim a refund by changing the original return or completing a SDLT repayment request form. This must be claimed within 3 months of the sale or 1 year of the filing date of the return, whichever comes later.

https://www.gov.uk/guidance/stamp-duty-land-tax-buying-an-additional-residential-property

just as a matter of interest, i am in a similer position.

OK,

I realise I'm asking a couple of questions about properties recently, the queries are related. On this one, my friend has is now reconciled to the fact that she will be a second home buyer if she isn't removed from the mortgage and deeds of the house she bought along with her sister.

So the next task is actually doing that, so she can move on and buy her own place... without falling foul of the 3% SDLT kicker. She will happily turn over any equity and liability to her sister and her sister is happy to take on the mortgage and house on her own.

But how does that play out in practice?

Is it just going to be a conversation with the Lender and the Lender agrees to it (plus probably asking them for an admin. fee), or do the girls need to instruct a Conveyancer straight off the bat? Is a Conveyancer needed at all or will the Lender take care of changing names on the Title Deeds at HMLR?

Is it reasonable to expect the Lender to just transfer the mortgage to her sister, or are they more likely to say that mortgage must be redeemed and a new one applied for (that seems incredibly inefficient, but you never know)?

Obviously this kind of thing must happen all the time - with couples who may break-up and suchlike... this is the same kind of thing, they're just family and one wants to move on... so I expect there's a process in place and even a name for what it is they're wanting to do.

Does anyone have any experience of this?

My advice still stands about getting advice. The term is transfer of equity but the remaining person will still be subject to the lender's criteria. The sister may not meet the lender's criteria. This needs to be done properly with a solicitor on both sides.

Your friend and their sister need to seek professional advice.

I think that's understood... but the term being transfer of equity is helpful in its own right. I am guessing the process must start with the Lender, though, right?

They have an appointment tomorrow.

Yes. If they are already due to speak the lender you might as well wait and see what they say first.

Disappointing outcome, I think. The Lender has said it might be possible, but they need to make another appointment to go through her sister's affordability rating and credit history... which is frustrating to hear as they turned-up with all of the documentation they reckoned they'd need, so either the bank person who met with them didn't know what they were doing or there was a bit of miscommunication.

---------- Post added 14-06-2017 at 16:15 ----------

Clarifying - disappointing because I knew it might be possible... in fact, I know it will be possible... so what have they learned from them going in?

Disappointing outcome, I think. The Lender has said it might be possible, but they need to make another appointment to go through her sister's affordability rating and credit history... which is frustrating to hear as they turned-up with all of the documentation they reckoned they'd need, so either the bank person who met with them didn't know what they were doing or there was a bit of miscommunication.

 

---------- Post added 14-06-2017 at 16:15 ----------

 

Clarifying - disappointing because I knew it might be possible... in fact, I know it will be possible... so what have they learned from them going in?

That's the problem these days with banks and societies, you initially speak to a mortgage administrator not an actual advisor, so when you actually get in to see the advisor it's a completely different story.

I am trying to pre-empt issues.

If her sister does not meet their affordability criteria, is there a way to fix that by coming in from the side, rather than head on? For example, if a £150,000 mortgage on a 30 year term at 2% means a payment of £550 per month, but a £140,000 mortgage on a 30 year term at 2% means a payment of £520 per month - does paying off a [sizeable] chunk of debt and recalculating payments immediately improve affordability?

I mean, most mortgages will allow at least 10% overpayment per year, right?

I am trying to pre-empt issues.

 

If her sister does not meet their affordability criteria, is there a way to fix that by coming in from the side, rather than head on? For example, if a £150,000 mortgage on a 30 year term at 2% means a payment of £550 per month, but a £140,000 mortgage on a 30 year term at 2% means a payment of £520 per month - does paying off a [sizeable] chunk of debt and recalculating payments immediately improve affordability?

 

I mean, most mortgages will allow at least 10% overpayment per year, right?

The lender will have a maximum amount they will be able to allow her to borrow, if that is below what is required she will have the option of paying some off to try and marry up with the lenders max loan. Most lenders do allow 10% overpayments without penalty.

She's decided to pay the extra SDLT. I think she wants a simple life. And this will allow her to move (as in the process) quicker. I see the sense behind that decision.

10% overpayment per year is a legal minimum that must be allowed these days. Whether it's backdated to existing mortgages I don't know.