Advice Please

Konisberg

Can anyone offer advice on this. My father in law has inherited a 2/3 share of a house. He wants to buy out the other third share. He is 62. The third share will cost 130k, the house is worth 400k and will rent for around £1100pm. He has a mortgage free property of his own and intends to rent out the inherited house. Do you think he will be able to get a BTL mortgage to cover the cost of buying out the third share? Normally I would think yes, but I don't know if his age will be a factor, even though it is based on income from the property.

Any help much appreciated.

Robert_Sterling_3

Why not sell the house.
Why become a landlord at 62.

Konisberg

Hi

Without complicating things too much, my mother in law is ill and father in law plans to move into the inherited (smaller) house in the next few years and sell the main family home.

Konisberg

Anyone else?

herbiesjp

It does look possible.

However what plans does he have to clear the mortgage debt i.e. will it be set up as a repayment mortgage or interest only?

What personal income does FIL have?

stuarthouse

So basically your FiL wants to borrow more in the tune of £130K. Thus owing £130K yet hoping to balance it out by rental income ...

My advice to everyone is Never to increase borowing. Never to increase debt.
ALWAYS DECREASE debt.


I personally would try to see if the other paRty is interested in selling the house ...
they may be interested in the ready cash & the hassle freeness of not having another propery on their mind.


From the proceedds your FiL can
1. put money in the bank
2. Buy a 2nd property debt FREE and rent it out.

Robert_Sterling_3

Will he be able to get a buy to let mortgage?

Since he will want a loan of only one third of the equity in the house and he owns another house he looks like a low risk borrower to put it mildly. I am optimistic that he will find a lender.

getmore4less

stuarthouse wrote: »

So basically your FiL wants to borrow more in the tune of £130K. Thus owing £130K yet hoping to balance it out by rental income ...

My advice to everyone is Never to increase borowing. Never to increase debt.
ALWAYS DECREASE debt.


I personally would try to see if the other party is interested in selling the house ...
they may be interested in the ready cash & the hassle freeness of not having another propery on their mind.


From the proceedds your FiL can
1. put money in the bank
2. Buy a 2nd property debt FREE and rent it out.

The OP want this one to live in later so wants to find a way to keep it.

£1100pm is 10% gross on the £130k so well covered by the rent.
this is low gross yield for the £400k valuation is that on the high side?

If the place they live in is worth say over £250k then I think they are well coverd on the downside when they come to sell. (given this smaller place is 400k it seem likely the larger family home is problaly worth more unless in a very different area).

I would also suggest that with these Numbers some inheritence tax planning may be sensible.

Konisberg

Thank you everyone for you replies. We are now planning to use the facility to pay IHT in instalments on property to fund this