What to do with Inherited house

jt2k6

Hi all,

Not sure if this is the right thread for it, but I wanna be debt free so here it goes! sure a mod will move it for me if it don't belong here!!!


As always I'm after some advice,
My wife and I have recently inherited some property from my wife's grandmother, the house is a 3 bedroom semi, in a quiet road in a reasonable part of preststyn, north wales,
The house is in good condition externally with recent new double glazing, new boiler, and the exterior has been re-pebble dashed about a year ago, the interior will need re-wireing at some point but it's deffinatly livable, and is a big step up the ladder for us as a familly with 1, (soon to be 2) kids. and would probibly do us for life, as it has a nice sized yard and garage for any future plans. the big plus is that it means we will be mortgage free (in theory)

however, I currantly live in a 2 bedroom terrace, in a "less nice" part of town, I pay £600+ a month on mortgage and currently owe about 100K on a property that is worth at best 80K add to that around 20K of debt.
so that leaves me with a problem,

do I live where I am, sell nan's house and use the money to pay off ALL the debt and potentailly clear the mortgage on the current gaff. Do I sell my current gaff, and take out a smaller secured loan on nan's house to clear the difference and pay off the debts, do I rent nan's house out, do I rent out my current place, or are there any other options?........


I really don't know, I'm a bit like Alicia Silverstone....... clueless!!!
Hope some one can help

Thanks

Matt

Charco_2

Inheritance Tax?

bunny999

Inheritance tax is only payable on estates worth over £325,000.
Where would you like to live ? If it was me I'd go for the inherited house. You could remortgage it pay off your debts and have lower outgoings than now.

planning_ahead_2

Have you considered moving into the inherited property and renting out your existing home. This may not cover all of the mortgage costs but you would have the option of retaining the property as either

a) a long term investment or
b) until such time as property values increase and you can sell it and cover the full balance of the mortgage from the sale.

By doing this you would not have to take out any additional borrowing.

This is probably what I would look into if I were in your position - but I have no experience in renting property (but do think that if you sell the inherited property you may be liable for capital gains tax if you do not live in it for a period of two years - worth checking for yourself what the rules are).

If you do decide to rent your current home you would need to advise your lender and insurance company that the property is to become a rental property rather than your home.

DGJsaver

planning_ahead wrote: »

but do think that if you sell the inherited property you may be liable for capital gains tax if you do not live in it for a period of two years -

I would be interested in the asnwer to this , if anyone knows it...

planning_ahead_2

copied from the direct.gov website

Paying Capital Gains Tax

Capital Gains Tax (CGT) is paid when someone makes gains (profits) above a certain level when selling certain assets. However, when someone dies any increase in the value of the property up to the date of the death isnt subject to CGT.
If you sell it later, there may be CGT to pay on any gain since the date of death though this won't usually apply if you sell an inherited property that you've been living in as your main home since you inherited it."

DGJsaver

Hmmm , the question i have from that excerpt is whats the certain level ?

bargainbetty

Why not move into your nan's house, sell the terrace, and have whatever of the mortgage is left unpaid switched to your nan's place? You will pay a lot less every month in mortgage, you'll have a nicer house, and you'll be able to throw whatever is left of what would have been your mortgage money at the other debts every month.

Good luck x

zarazara

Can you post a SOA? I'm tempted to say move to the inherited house, but thats no good if you cant repay the loan and loose the house.

jt2k6

bunny999 wrote: »

Inheritance tax is only payable on estates worth over £325,000.
Where would you like to live ? If it was me I'd go for the inherited house. You could remortgage it pay off your debts and have lower outgoings than now.

Thanks,

the house is only worth £200K or so, so IT is not an issue, would rather live in the inherited house, but just unsure what to do with my current house and if I can't sell it or rent it then will end up having more outgoings!!!

I guess it's a nice problem to have, just need to plan carefully!

Thanks again

Willow_K

I'd move into the inherited house, switch to an interest only mortgage on the other house to reduce the mortgage to a level that would be covered by rent on the basis that you will be selling before the mortgage term is up.

Rent the terraced house out to cover the IO mortgage plus hopefully some of your other debts then sell it when the market recovers or some time in the future before the mortgage term is up.

If you rent it, the money you save from your current £600 mortgage can go towards paying your other debts or doing the new house up.

Alternatively what others have suggested - sell the terrace to pay all debts and take a smaller mortgage out on the new house - problem with this is you say you will lose money.

The main question would be what will cost you more - the interest on the debts while renting or the loss you would take by selling the terrace now plus the interest on the smaller mortgage?