Reply With QuoteI can’t add any personal experience, but no doubt with the right legal conveyancer and mortgage broker in place, this transaction sounds like bread-and-butter work for all parties concerned. I fully imagine, this scenario pops up all the time.
I’m sure this is a common thing but if two people inherit a house and one wishes to gain a mortgage on that property to enable them to buy the other person out this is a normal practice ??
I’m guessing there would be a legal document that says that on transfer of funds the property then becomes sole owner . It seems some mortgage companies are saying that they will not do a mortgage because of the dual ownership and the property needs to be transferred before a mortgage can be applied for .
Thanks on any advice.
I can’t add any personal experience, but no doubt with the right legal conveyancer and mortgage broker in place, this transaction sounds like bread-and-butter work for all parties concerned. I fully imagine, this scenario pops up all the time.
I've not heard of a property being "jointly inherited" as an asset - generally it's the value of that home you jointly inheirt.
I thought the estate has to go through probate first and a market value obtained for the home for that purpose and all taxes due paid. It's not trivial to do by yourself as executor - far easier to sell the home and divide the proceeds - but as stated for a decent legal team should be doable.
Last edited by Scepticalist; 18th May 2022 at 19:34.
Person not retaining the house can remove his name from the deeds, and immediately put a charge on the house for the agreed value. Then it should be mortgageable and mortgage co will expect the charge to be redeemed on completion (which would be standard on most house sales anyway, with another mortgage Co having an existing charge in most cases)
Last edited by demonloop; 18th May 2022 at 19:56.
Joint inheritance of a property can be achieved by a “tenancy in common”, where the beneficiaries share ownership of the property, with a nominated percentage each.Originally Posted by Scepticalist
Even if the property was jointly owned, it’s a relatively normal process in a huge number of divorces to transfer ownership to one party in exchange for value or payment.
A good conveyancing lawyer will no doubt help.
It's just a matter of time...
One of them could buy the other out, but would only be able to get a mortgage for their share (50%, assuming it’s split equally). I’d suggest getting in touch with a specialist lender or an experienced broker to help.
I don't think this is correct. The person taking 100% ownership of the property can apply for anything up to 95% loan to value - this being the highest I think available at the moment from the mortgage market. In reality they'll need a 50% LTV mortgage, assuming it's a 50/50 split in the house at present. But, as long as affordability isn't an issue, the person remaining can borrow as much as they like. They just need to hand over cash equal to the value of the share the other person has/will have had.
Something to take into consideration will be stamp duty. The person acquiring the other 50% will be liable for stamp duty. Well, I believe so. As I see this transaction as no different than an unmarried couple going their separate ways. Where the person buying the other out has to pay stamp duty at the going rate, albeit at 50%. That person is acquiring a share in an asset they hadn't previously owned, thus HMRC will want their cut.
I think they should just approach whichever bank they like, and ask for a mortgage of £x/x% LTV. They state they are/will be the sole owner, and the funds to be borrowed are to buy out another party.
The person owns 50% and they want to get a mortgage to buy the other 50% share. The mortgage they get would be limited to their ownership level in the property. They can’t borrow as much as they like.
Last edited by hansblix2001; 19th May 2022 at 07:03.
Sorry but that’s wrong. They could borrow whatever they want subject to LTV lending amounts and providing they have sufficient income, good credit and other criteria (say current borrowings).
OP this is very straight forward, happens a lot. Speak to an independent mortgage adviser to sort out a mortgage. Once the property is valued and you are both happy on a fair price (no estate agent fees etc) you can start the ball rolling and when probate is sorted, can get complete the transaction.
The mortgage would indeed be limited to their ownership level in the property but after the transfer rather than before.
They would be allowed to own up to 95% LTV depending on their circumstances.
Surely it’s no different than buying a property with a 50% deposit.
Someone I know did this with their mothers house when she passed away. Left to him and his brother and he bought the brother out and lives there now. Once probate was done and it was in their joint names he called the bank and just got a mortgage that way. Wasn’t complicated.
That makes no sense.
I mean, when you buy a house on the open market you don’t have any share in it at the point you apply for the mortgage.
This must happen all of the time, ask a mortgage adviser
Did similar a few years ago, though not with an inherited property. Property owned 50/50 by myself and brother. I remortgaged in my sole name and the conveyancer did the transfer at the same time as the mortgage, cost an extra £200 or so in conveyancing fees
Yes, I've done exactly this.
Inherited 1/3 of a property. Took out a mortgage for the remaing 2/3rds and bought the other two owners out. Very simple and bread and butter work for mortgage company and conveyancers.
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