Real Estate

buying the house I live in from my mother without down payment

  • Last Updated:
  • Aug 29th, 2016 6:54 pm
[OP]
Newbie
Aug 24, 2016
38 posts
6 upvotes

buying the house I live in from my mother without down payment

Hi.
I'm new to this forum.

I have a question I can't find the answer to.
Almost 4 years ago I separated from my husband and relocated with my children. I rented a house for 2 years before wanting to buy a house that was going up for sale on my street. But because my divorce was not complete, I had a high joint line of credit with my ex-husband and a mortgage from my matrimonial home on my credit so could not get approved. I was told it was basically because of the line of credit that didn't allow me to be approved for the mortgage. (it was $40 000) Instead of losing the house, my mother essentially bought it, put her name on the mortgage (solely) in a 2 year mortgage. I provided the down payment, lawyers fees, etc and I pay her the mortgage amount every month. The thought was in 2 years I would no longer carry the debt and we would change it to my name. We never thought at the time to find out how that would work. I recall something about her stating she lives in the house X% of the time to avoid it being a "secondary" house. At the time, she did stay here a fair amount as I was working full time plus a full time student and she was my babysitter so would stay the night a few days each week.

Fast forward 2 years to now...line of credit is paid off, house has sold, my credit score is good (not great but good) and my household income is good so I assume I could qualify for the mortgage on my own at this point. The mortgage is up for refinancing in February.

How do we go about having her "sell" the house to me. It is currently financed with a mortgage broker. But I don't have another down payment and don't know where I would get one. Is it possible for me to mortgage the house without one? Is there any way to avoid having to come up with another down payment?
FYI - she doesn't have interest in cosigning with me. The 2 year mortgage really maxed out her credit availability and I know she would not be favourable to staying listed on the mortgage.

Any help would be appreciated!
9 replies
Deal Fanatic
User avatar
Mar 23, 2008
8437 posts
5070 upvotes
Edmonton
I would start by talking to a mortgage broker. They seem to have the most flexibility and options available.

C
Deal Addict
Jan 13, 2014
1219 posts
337 upvotes
Calgary
You can just do a mortgage assumption and have the mortgage moved over from your mother's name to your name without affecting any payments etc. The only issue here is that:

1. You need to find a broker who would actually do this for you, because there is no commission to be made so no one would do it. If your financed from a big 5 bank then good luck finding a branch representative who would be willing to do this. For mortgage assumption you also need to pay lawyers fees (in around 500-800).

2. You will keep the same rate that your mom had gotten 2 years back. This could be a good thing or a bad thing.

You also have another option to get a broker to work with you in February to have the mortgage moved over to your name. I have seen this happen before and it is definitely doable. In this case your mom would need a lawyer and you would need one as well.

I hope you have good luck with this.
Deal Addict
Jan 13, 2014
1219 posts
337 upvotes
Calgary
Also just to add, depending on the broker structure your application , you do not need a down payment in this scenario.
Deal Fanatic
User avatar
Feb 2, 2014
6181 posts
1396 upvotes
Toronto
Melissa7791 wrote:
Aug 25th, 2016 10:10 pm
Hi.
I'm new to this forum.

I have a question I can't find the answer to.
Almost 4 years ago I separated from my husband and relocated with my children. I rented a house for 2 years before wanting to buy a house that was going up for sale on my street. But because my divorce was not complete, I had a high joint line of credit with my ex-husband and a mortgage from my matrimonial home on my credit so could not get approved. I was told it was basically because of the line of credit that didn't allow me to be approved for the mortgage. (it was $40 000) Instead of losing the house, my mother essentially bought it, put her name on the mortgage (solely) in a 2 year mortgage. I provided the down payment, lawyers fees, etc and I pay her the mortgage amount every month. The thought was in 2 years I would no longer carry the debt and we would change it to my name. We never thought at the time to find out how that would work. I recall something about her stating she lives in the house X% of the time to avoid it being a "secondary" house. At the time, she did stay here a fair amount as I was working full time plus a full time student and she was my babysitter so would stay the night a few days each week.

Fast forward 2 years to now...line of credit is paid off, house has sold, my credit score is good (not great but good) and my household income is good so I assume I could qualify for the mortgage on my own at this point. The mortgage is up for refinancing in February.

How do we go about having her "sell" the house to me. It is currently financed with a mortgage broker. But I don't have another down payment and don't know where I would get one. Is it possible for me to mortgage the house without one? Is there any way to avoid having to come up with another down payment?
FYI - she doesn't have interest in cosigning with me. The 2 year mortgage really maxed out her credit availability and I know she would not be favourable to staying listed on the mortgage.

Any help would be appreciated!
Yes, we can get it done assuming you have enough equity in the property. You will have to get a lawyer involved and you will have to do an appraisal.

Any idea how much the mortgage will be in February and what the property is currently worth?
Kevin Somnauth, CFA
Mortgage Broker - Mortgage Architects (#10287) and Real Estate Salesperson - Century 21 Innovative
President's Club Award Winner At The Mortgage Architects
Deal Fanatic
Jul 3, 2011
5125 posts
2268 upvotes
Thornhill
Melissa7791 wrote:
Aug 25th, 2016 10:10 pm
Hi.
I'm new to this forum.

I have a question I can't find the answer to... Instead of losing the house, my mother essentially bought it, put her name on the mortgage (solely) in a 2 year mortgage. I provided the down payment, lawyers fees, etc and I pay her the mortgage amount every month. I recall something about her stating she lives in the house X% of the time to avoid it being a "secondary" house...

Fast forward 2 years to now...line of credit is paid off, house has sold,..

How do we go about having her "sell" the house to me. It is currently financed with a mortgage broker. But I don't have another down payment and don't know where I would get one. Is it possible for me to mortgage the house without one? Is there any way to avoid having to come up with another down payment?...
If I understand correctly your mother did not contribute to the costs to carry in which case she has no investment in the property so you may want to speak with a real estate attorney about her gifting it to you and the implications of that which I understand would be negligible to both of you. I would presume that at the very most there would be lenders willing to accept her as a guarantor (holding 1% or some small amount) after she gifts it to you and in the event they won't lend to you singularly.

Where there's a will there's a way, the real estate lawyer is the one to turn to.
Deal Fanatic
Mar 12, 2010
6016 posts
574 upvotes
SW Ontario
Like above the answer should be yes, you can do this without another down payment. With a broker most likely as they tend to be most flexible for these kinds of unique circumstances. I would think your mom could gift you the sale amount that would have your down payment in it when she sells it to you, with a letter of gift and an agreement to do so as a condition of sale to you. There is probably an easier way with a broker, but as long as everyone was on board that should work technically.

See what the broker or bank rep says.
Deal Addict
Oct 29, 2010
4248 posts
612 upvotes
Would there be any tax implications for gifting a house?
Deal Expert
Aug 2, 2001
15457 posts
5709 upvotes
I cannot comment on the mortgage options available - however I can comment on how to purchase a home from a family member without a down payment. There is the option to have the seller "gift" you equity in the home during the sale provided that the amount of the sale is in line with the appraised value of the home. For example, if the appraised value of the home is $200,000 you could purchase it for $200,000 and have the seller "gift you $20,000 in equity", and this will all be drawn up with your lawyer.


(for reference, I did this exact same thing when purchasing my home from a family member)
[OP]
Newbie
Aug 24, 2016
38 posts
6 upvotes
Thank you so much for the replies! You have been a wealth of information.

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