Can’t remortgage my property due to main residence link?

Can’t remortgage my property due to main residence link?

10:51 AM, 18th January 2017, About 7 years ago 20

Text Size

Hi guys I’m new here. Last year we purchased a property for £27,000 for cash and renovated it we waited for the 6 months to try to remortgage, the estimated value is around £65,000/£70,000 we had The Mortgage Works out to value it to get a buy to let mortgage on the property, but when they done the valuation and searches it turned out that my residential property and the property that we bought had a link of some sort and “The Mortgage Works” couldn’t Lend us the money. link

My mortgage advisor has said that all the other lenders would be the same as The Mortgage Works. My dilemma is that I need to remortgage the property to get money out to fund another buy to let.

Does any one know how I could or recommend a company that I could speak to about remortgaging or getting a loan on the property.

Any help would be much appreciated


Share This Article



7:52 AM, 19th January 2017, About 7 years ago

Sorry if my previous comment was a little blunt, I also didn't notice that you have given the property's current market value (is it really that cheap?).

But the lender is likely to have two concerns with a property sold well below market value. The inheritance tax dodge is the first - they will not have assessed the step father's tax position so will have to assume that full IHT is due on the amount he gifted if he dies soon.

The other, as pointed out, is that it might be perceived as an artificial way to avoid nursing home fees.

This means that there are two branches of government that might want to put a charge on the property. You can see why this would make them nervous.

One option is to sell and realise the gains now, although you may end up with a CGT bill.

Neil Patterson

8:12 AM, 19th January 2017, About 7 years ago

Hi David,

Buying under value from a relative and then trying to remortgage is always going to be an issue for a lender and your solicitor should have discussed Deed of Gift Indemnity insurance with you.

Steven Burman

10:59 AM, 19th January 2017, About 7 years ago


Neil is absolutely correct. The local authority have almost certainly placed a notice/charge against the property to ensure your partners step-father has sufficient funds to cover his care costs.

You may have similar difficulties should you try to sell the property on.

You need to obtain specialist legal advice.


David redmond

16:53 PM, 19th January 2017, About 7 years ago

An estate agent valued it roughly around the £40,000 mark we have since put new kitchen bathroom combo boiler and plastered it through out and new carpets
The care house had all there fees as the guy who owned the property died in the care home and all there fees were paid up before I could purchase the property
We were not family either

Dr Rosalind Beck

18:07 PM, 19th January 2017, About 7 years ago

Reply to the comment left by "Neil Patterson" at "19/01/2017 - 08:12":

Hi Neil.
What is Deed of Gift Indemnity insurance?
Also, to hijack the thread a bit more (sorry) I am thinking of selling some houses to my kids in a few years' time - to minimise my exposure to s24. The ones I am thinking of have barely gone up in value so there wouldn't be an issue with them being sold BMV etc. I did read that lenders won't allow mortgages where the mortgagee (eg my son) is related to the seller. I was wondering if that is the case with all lenders. I was also wondering if a way around it might be to, eg. sell a cheap house valued at around £60,000 in January (of whatever year), which will be paid for by my son in cash. Then, around July have my son apply for a mortgage on it. Would that work do you think?

Neil Patterson

19:01 PM, 19th January 2017, About 7 years ago

Hi Ros,

If someone is effectively gifting you equity by selling a property under value to you then there is a risk that the creditors (of any type) can come after you for what they are owed. Eg if My Brother was looking like going Bankrupt and deliberately hid his wealth by selling his property to me cheaply then the administrators would rightly be wanting me to pay back the gifted equity.

Therefore a solicitor can advise you to take out Deed of Gift indemnity insurance to cover anyone claiming against you, BUT it can not be something you could have foreseen.

Dr Rosalind Beck

19:05 PM, 19th January 2017, About 7 years ago

Reply to the comment left by "Neil Patterson" at "19/01/2017 - 19:01":

Thanks, Neil. Do you foresee any problems with the rest of the plan - notably the selling for cash and my son later getting a mortgage on it, after he has owned it outright for 6 months?

Neil Patterson

19:10 PM, 19th January 2017, About 7 years ago

Reply to the comment left by "Dr Rosalind Beck" at "19/01/2017 - 19:05":

Hi Ros there is no CML rule against your son buying your house, but a lender may prefer not to in their criteria or ask for indemnity insurance to be on the safe side.

It is possible that buying for cash and remortgaging later is even more difficult so I would ask a broker to find a lender that would consider your son's purchase first.

Dr Rosalind Beck

19:16 PM, 19th January 2017, About 7 years ago

Reply to the comment left by "Neil Patterson" at "19/01/2017 - 19:10":

Thanks, Neil. Yes, my broker is a 'can do' sort of guy, so hopefully he will know which is best. It's a few years away yet. I believe for a BTL mortgage you have to be at least 21 years of age. I think this could be a useful plan though for those of us with adult or near adult children.

Incidentally, Andrew Tyrie of the Treasury Select Committee, talking about the digital returns said that business people will resent all this interference and the associated costs, which as he said will push some people out of business. He implied we will more or less start to see HMRC as the enemy - basically, many of us would not have bothered to look for tax-efficient ways of avoiding the s24 trap, but we will now - and in a way which will also probably mean they get less IHT from us as well in the future.


13:12 PM, 22nd January 2017, About 7 years ago

You say you are not family, so could the beneficiaries of the estate of the person in the care home feel they have been short-changed and have put a restriction on the title?

Leave Comments

In order to post comments you will need to Sign In or Sign Up for a FREE Membership


Don't have an account? Sign Up

Landlord Tax Planning Book Now