If you are buying your property jointly with another person, or persons even, there are two ways in which the ownership of your property can be arranged - either as a Joint Tenant, or as a Tenant in Common.
So read on for our look at Joint Tenancy vs Tenants in Common, the differences between each, and the potential mortgage help we are able to offer.
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So, as we looked at above, in situations where there are two or more persons looking at purchasing a property together, the ownership of the property can either be arranged on a
What are the differences between these two different types of property ownership then you may well ask. Well, most properties that are owned in joint names are arranged on a Joint Tenancy basis. Effectively this means that if you or your partner dies, then the entire ownership (and mortgage liability) transfers over to the surviving partner.
However, if the ownership of the property has been arranged on a Tenants in Common basis, each parties share of the property will be defined in the mortgage deed. For example, a husband and wife may have decided that their ownership shares should be held in the proportion of 50% each.
This means that in the event of the death of one party, instead of the property ownership automatically passing across to the survivor, as in the case of a property owned on a Joint Tenancy basis; the deceased party's 50% share of the property (together with 50% of any mortgage liability outstanding), will pass to their Estate for distribution in accordance with the terms of their Will - and for Inheritance Tax (IHT) purposes, this will be someone other than the spouse.
As transfers of the Estate between spouses on death are free from Inheritance Tax, the severing of a Joint Tenancy arrangement, and replacing with a Tenants in Common agreement will have the effect of using the Inheritance Tax Nil Band rate, (currently the first £300,000 of a person's Estate), twice!!
In recent years, various property booms have catapulted even the most modest of homeowner's Estates well beyond the rate at which Inheritance Tax (IHT) at 40% becomes payable. This threshold is currently £300,000.
As a result, more and more married couples are changing the way in which the ownership of their property is held. This will involve the severing of the Joint Tenancy agreement and replacing it with a Tenants in Common ownership arrangement, and between married couples this will usually be on a 50:50 basis. By severing the Joint Tenancy, the Tenants in Common agreement will permit the effective use of the IHT "Nil Rate Band" on both couples Estates.
This will be done by each spouse leaving their 50% share of the property to someone other than their spouse, thus taking their 50% share out of the remaining spouse's Estate. By removing their share of the property from the surviving spouse's Estate, a potential saving of up to £120,000 can be achieved at the time of the death of the surviving spouse, as half of the property's value has already been removed on the death of the first spouse.
Yes, no problem!
A qualified Shire Direct mortgage advisor will carefully assess your circumstances, needs, requirements and aspirations and discuss these aspects with you. From there, the Advisor will instruct your solicitor as to your wishes, and this will ensure that the legal aspects are suitably considered and you receive the appropriate legal advice on the matter from your solicitor.
We pride ourselves in offering a thorough, personal service, and believe you will find our team at Shire Direct to be friendly, professional, helpful and not the slightest bit stuffy! So why not Contact Us to discuss your requirements. You can enquire online at any time, or you can call us free on our Freephone number 08000 282 281, our lines are open everyday (including the weekends) until 10pm. Our mortgage advisors will be delighted to discuss your requirements naturally without obligation, and provide you with a speedy in-principle decision, whatever your circumstances.
We trust we've managed to explain the differences between Joint Tenancy and the Tenants in Common methods of property ownership and hopefully have managed to clear the waters a bit for you! Indeed there is a wealth of information throughout our site which you may find useful, so why not grab a cuppa, and take a few moments out to explore the options that may be open to you, and don't forget if you feel we can be of assistance with a Mortgage or Remortgage, then we'd love to hear from you!
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