Mortgage clinic: ‘Should I add my fiancé to my mortgage before we get married?’

Francesca Baker, 36, works in PR and marketing (andsoshethinks.co.uk). In 2021, she bought a two-bedroom flat in Old Street for £405,000 with a £200,000 deposit. She now lives there with her fiancé, who she is due to marry in July.

“He has another property which he is in the process of adding me to the mortgage of. I want to add him to mine so that both houses are both of ours.”

That said, Francesca doesn’t want to remortgage because she has such a low fixed rate.

“If I remortgage now, I wouldn’t get a 1.3 per cent rate.” She might also be liable for early repayment charges. “My question is: can I add him without losing my low rate and should I do this before or after we get married?”

The details

• Property bought in 2021 for £405,000

• Current fixed rate: 1.3 per cent

• Fixed rate expiry date: October 2026

The advice

Jane King, mortgage adviser at Ash Ridge, says:

Adding a party to a mortgage should be straightforward but there is a process. Firstly, mortgage lenders must agree to it and Francesca’s fiancé must be on the deeds to the property as well as the mortgage. They may do background and credit checks and, if there is any adverse credit, they are likely to decline.

If they are agreeable to adding Francesca’s fiancé then the lenders will issue a new mortgage offer in joint names — they usually let borrowers keep the same rate and term so she will not have to pay any early repayment charges.

This is now just a conveyancing matter. Francesca should instruct a firm of solicitors who will note the joint ownership at the Land Registry. In addition, as there will be a transfer of equity, there may be a stamp duty issue as HMRC will deem her fiancé’s share to be 50 per cent of the value of the property. It will also be treated as her fiancé’s “second home” and an additional three per cent stamp duty may be payable. The solicitors can advise further on this.

Francesca needs to bear in mind that, on completion of this transaction, they will become joint owners, so in the event of her death the property will revert to her fiancé. Bearing in mind the significant deposit she has put down, it would make sense to protect this by way of a deed of trust/pre-nuptial agreement, just in case they do decide to separate.

Alternatively, there is a strong argument for waiting until they buy a new property together. The stamp duty issue alone would be a potential cost difficult to justify.

Mark Humphrey, director at MHC Mortgages, says:

This is actually  a bit of a complex puzzle and I’d recommend Francesca and her partner seek tax planning advice from an independent financial adviser. Adding themselves onto each other’s mortgages could mean having to pay stamp duty, and at the additional rate.

However, there are potential inheritance and capital gains tax considerations further down the line if they don’t proceed. Understanding the most tax-efficient way now could save them thousands of pounds in the long run.

If they decide to add her partner to the mortgage, Francesca would need to contact her existing lender and follow the process for adding a borrower, which may be via a phone/video call or an online application. The lender will assess whether it is happy to add him after reviewing his credit file, some information about him and possibly some documentation, eg a payslip or bank statement.

Assuming the lender approves the request, the 1.3 per cent fixed rate would then remain in place unaffected until it is due to expire in October 2026.

You should seek independent advice from a qualified professional before acting upon any information contained in this article