Inherited Property, buying it and how to go about paying it off.

mjoyeux

Just after a little advice, I've got a slight bit of confusion as to what I need to do with a property/mortgage.

At the moment I am living in a property which I have inherited a part ownership in. The value of the property is £90,000 and I need to buy out the other owner of the property as stated in the will to the tune of £20,000.

I have about £10,000 in collective debts (loans, credit cards and overdrafts) and I earn £26,400 a year. I intended to take a Mortgage out for £30,000 over 20 years to buy the house outright and pay off my debts, with the intention being of overpaying the mortgage by about £100-£200 a month - either through direct overpayment or through saving the money up and paying a lump sum off in about ten-fifteen years, depending on my life situation. My wages are fairly decent and will continue to rise up to about £29,000 over the next two years with the chance of higher wages as I move on at work. I would like to think that I'd pay the property off as soon as possible.

However, my slight complication is that the house is in need of a couple of minor repairs and needs a little modernisation. The repairs, estimated to be about £5,000 with a further £5,000 for modernisation were going to be paid from a lump sum which I was expecting to receive before the end of the year. However, the lump sum might take a couple of years to sort out with legal issues.

So I was thinking of taking a £40,000 mortgage instead and paying off £10,000 when I get the lump sum, continuing to overpay/save as originally stated. What's you're advice on this?

Also, in probably the most silly question of the post, what would be the best way of going about getting a mortgage? I was going to go with a broker like London and County to see what I could get.

Any help or advice would be massively appreciated.

mini_moneysaver

Hi,

You would probably be better off using a broker as your equity is in your inheritance side of the house, this needs to be dealt with by someone who can get this understood by the mortgage company - from experience i wouldnt advise you do this yourself unless you are very confident in the mortgage process as the lack of a physical cash deposit for a ftb can complicate matters with some lenders.

you also have quite a high level of personal debt in relation to your income - a broker will know if any lenders would have an issue with this in the tighter mortgage approval market we currently find ourselves in!

good luck!

dimbo61

Consider an offset mortgage !
that way you only need to draw on the funds as and when you need to pay debts.
So you take out say £45,000 offset mortgage and pay off your debts and the £20K to the other party.
The rest you put into the offset account and when you have work done on the house you have the money in cash to pay the builders.
You also have an emergency fund to cover for emergencies and NOT use credit cards.
You can either overpay the mortgage each month or put savings into the offset account!

Conrad

Be careful that anyone you use FULLY appreciates the complexity here. Someone at L&C may tell you it's no problem but this will indicate they do not understand or even recognise the issues. As an example all applications are online but the programmers did not forsee cases such as yours so the system will 'assume' you already own the property and as such already live there, which I suspect is not the case.

It's all doable but you need someone with good experience and the sort of mind that isn't 'oh so positive' as those minds do not spot problems before they arise.

Best

mjoyeux

Thanks for the advice so far guys, it's very much appreciated!

So in terms of getting a mortgage, what's the best route for me? To approach lenders directly and explain the situation? To use a broker like L&C or should I go and speak to some one face to face?