mortgaged house swap (scotland)

[sunbabe_55]

can anyone advise me, that if you are bought a house and have a mortgage, and perhaps need to move to a new job,

can you swap houses with someone else who is in the same position? e.g same value (approx) size is there any companies who deal in this type of venture?

[illya7]

Not really.

the bank that holds your mortgage has a standard security over the property that you are occupying and will only discharge that security (i.e release the title deeds which they are holding onto)if the property is sold or the mortgage is redeemed. (they wont just swap it over to another property.)

you will need to do a mortgage application for the property you are buying, you will need to at least provide a basic valuation for mortgage purposes from a surveyor on the new property (they may not be happy to lend money on the new property even if it is of similar value as they also base their decsion to lend on the type and condition of the property )i
they will also want your solicitor to provide a certificate of title, i.e a set of new title deeds with your name on them.

also you should bear in mind that if either parties financial circumstances have changed since they bought their property, they may not be able to get a new mortgage even if it is for a similar amount

however if both buyer and seller are doing their swap in private rather than open market you should at least save money on legal fees although i would strongly advise that you do not share the same solicitor.

i am a mortgage adviser so i hope this helps but your first point of call should be to get in touch with your solicitor then your bank

[Stu Dent]

In order to 'swap' properties you would each have to go through the correct conveyancing process and actually sell your homes to each other and buy each other's homes in return. Why?

Ownership of heritable property (land and buildings) cannot be transferred solely by private contractual agreement - it must be registered in the land register. Only on registration at the land registry does ownership transfer.

And, as sunbabe has mentioned, if you have a loan secured on the property by granting the lender a standard security, (the Scots equivalent of a 'mortgage') the lender has a right in that property, and will continue to have a right in that property until the point where the debt is discharged.

Even if each have no loans secured against their respective properties it could be a problem. Suppose Alf and Bert agree to swap houses and Bert becomes bankrupt at some point in future. Bert would still own the house he sold to Alf, but a creditor of Bert's could take Alf's home - because it is still owned by Bert.

If Bert dies, his home (registered/owned to Alf), cannot pass to bert's successors - he does not not own it, so the right to it cannot pass.

So, don't swap! Buy/Sell through your own solicitors (by law you have to), and get it all done properly.