Why don't the bank just move the mortgage to a new property?

Hi, i am currently in the process of inheriting a house from a parent and there is two mortgage loans (€19k and €8k) secured to the property. Neither of the mortgage loans are for the property i am inheriting. The bank is insisting that the two mortgage loans (both trackers btw) are repaid before they will release the deeds. Parents have asked the bank to change the collateral securing these two mortgage loans to another property they own but the bank is refusing. i would of thought the bank could facilitate this - both properties are of equal value. Is there anyway i can get the bank to move the security? i think they probably want the two tracker mortgages off their books...

BigProblem said:

i am currently in the process of inheriting a house from a parent

Click to expand...

BigProblem said:

Parents have asked the bank to change the collateral securing these two mortgage loans to another property

Click to expand...

How are you inheriting if, it seems, your parents are still alive?

sorry i should of said gift so we have CAT and CGT to pay.

If the lenders are insisting that the loans be cleared then I don't really see that you have any options here.

The bank are not going to just switch the loans to another property, it would require a new mortgage application for the total amount on the property being offered and all the hassle that comes with that, income details etc. Then the old mortgages would be cleared from the new mortgage, it doesn't matter that they weren't used for the property they are on, it is the mortgaged property.

Simplest thing if possible for you might be just get a CU loan to clear the o/s amounts.

surely they must give a reason. it says on the loan account statement that 'Security release fee' is €0.00 and 'breakage cost' is €0.00. does that not mean they should be able to move the loans to other property?

No. Those fees being zero have nothing to do with being able to switch to securing the loans on a different property. They refer to there being no charge for removing the charges on the property on which the loans are secured when the loans are cleared, and the fact that there's no fixed rate breakage charge - because they're variable rate loans.

BigProblem said:

surely they must give a reason. it says on the loan account statement that 'Security release fee' is €0.00 and 'breakage cost' is €0.00. does that not mean they should be able to move the loans to other property?

Click to expand...

They are able to, if they want to. The fact that no fee is charged for doing this doesn't mean that they have to, if they don't want to.

The fees are not really quoted in the context of substituting one security for another, though. The "security release fee" is the fee charged for releasing the security, which normally happens when the loan has been paid off, which it hasn't been. The breakage fee is the fee charged for paying off the loan early, which you don't want to do.

If what you were doing was substituting one security for another, there would be a third fee, which is the application fee for a mortgage on the second property. (Plus there'd be the conveyancing costs of actually drawing up, executing and registering the mortgage on the second property.) But these only arise if the bank wants to accept the second property as security, which it can't be compelled to do.

BigProblem said:

gift so we have CAT and CGT to pay.

Click to expand...

This is a far bigger issue.

Have you taken paid professional advice on the transaction to make sure that these are minimised?

For example, if your parents are paying CGT , you can set any payment they make against your liability for CAT.

This presents some planning opportunities depending on the very specific facts of the case which a tax advisor would sort out with you.

Brendan

Why do your parents not repay the €27k loans and keep everything simple.

Even if the bank agreed, it would not be a good idea as the legal fees on both sides would be a high proportion of the mortgage amount.

The tracker issue is just not relevant. The interest rate is about 3% with a very low cost tracker. Even if you were saving 1% a year, it would only save you 1% of €27k which is €270. And this will reduce quickly as the loans are paid off.

Brendan

ok thanks for your responses.

Brendan Burgess said:

This is a far bigger issue.

Have you taken paid professional advice on the transaction to make sure that these are minimised?

For example, if your parents are paying CGT , you can set any payment they make against your liability for CAT.

This presents some planning opportunities depending on the very specific facts of the case which a tax advisor would sort out with you.

Click to expand...

thanks Brendan, yeah our accountant has looked after this, he has offset the CGT against the CAT liability.

BigProblem said:

he has offset the CGT against the CAT liability

Click to expand...

So the transfer of the property from your parents to you has already taken place? I thought that you were so just considering this at this stage?

ClubMan said:

So the transfer of the property from your parents to you has already taken place? I thought that you were so just considering this at this stage?

Click to expand...

no it hasnt taken place yet but the accountant has given us the figures (CAT and CGT) which we would have to pay in the event of the transfer. we would be paying CGT on behalf of parents.