Property: Home truths

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Keep it in the family

My husband recently inherited a house from his parents. We would like to help our son get on the property ladder by selling it to him. Unfortunately, he would not be able to get a mortgage of the size that would be needed. Is it possible to sell a property for lower than its market value?

Name and address supplied

It is possible, and quite common, for people to sell property for less than the market value. If you plan to sell it for a substantially lower price, a deed of gift may need to be drawn up by your solicitor. This is used to transfer the ownership of a property where little or no money changes hands.

If your son takes out a mortgage to pay for the property, you may also need to arrange a deed of gift indemnity policy. This helps to protect him and the property if you or your husband are unfortunate enough to be made bankrupt in the future. You will need to contact your solicitor who will be able explain in more detail how a deed of gift indemnity policy works.

If the cap fits

I have recently seen lots of adverts for capped-rate mortgages. What are they and how do they work?

Miss R Clarke, Gloucester

On a capped-rate mortgage there is an upper level above which the interest rate will not go - for a set period. The only negative aspect to a capped- rate mortgage is that there will usually be a fee to take out the mortgage, and if you wish to change lender during the capped-rate period there is likely to be an early redemption charge.

Ties that bind

My wife and I have been looking for a new house for some time and have recently found a house in the country that is ideal. We spoke to the owner who told us there is an agricultural tie on the property. Is this something that should concern us? If so, is it possible to have it removed?

Mr P Oldfield, Canterbury

An agricultural tie is a form of "restrictive covenant" Its main impact is that it reduces the marketability of the property by limiting buyers to those involved, or intending to be involved, in agriculture. As I understand it, you need to approach the local authorities or the person who has the benefit of the tie to have it removed, but often this is not easy. I suggest you seek legal advice.

When the fix ends

Could you explain what happens at the end of a discounted or fixed-rate period?

Kay Larkin, Wrexham

You should be told when you take out the fixed-rate mortgage whether you will be moved on to the variable rate or offered another rate when the agreement ends. When you are coming to the end of the contract some lenders will advise you of the new mortgage offers available to you. It is important to ask when you take out a mortgage what will happen when your fixed rate ends.

q George Wise is managing director of NatWest UK Mortgage Services.

q Send your queries on practical property issues to: Home Truths, 'Independent on Sunday', 1 Canada Square, Canary Wharf, London E14 5DL; fax 0171-293 2043; e- mail sundayproperty@independent.co.uk

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