Inherited house but with debt

vegasvisitor

You can't inherit debt, but if there is a house and then also debt, then you will not have an overall debt, so you wouldn't be inheriting debt really at all.

If the house is worth £100k, and £10k of debt, then you are inheriting £90k. This is before you pay the funeral or the lawyer of course if you haven't factored that in. The £5 debit will be the priority, as it is secured on the house. The bank or loan company actually own that amount of the house, so it's not yours to keep. You would have to raise that money to pay them off before you can transfer the title deeds into your own name. You will also have to pay legal fees associated with removing the charge.

I have some experience with this with the sale of my mother's house, (more than £10k debt though), whereby I had to sell the house urgently to raise the funds to pay off the debt. I'm afraid if you can't raise the money somehow to pay the debt then you need to sell the house. This also applies to the unsecured debt. You should ask them to freeze the interest. They are not obliged to do so, but there's a good chance they will do that.

Hope this helps in some way.

G_M

Who are the executers of the estate? They will have to deal with the debt before they can release the house to you. To do this, they might be forced to sell the house if there are no other assets, unless you come to an agreement with them to pay off the debts yourself so as to be able to inherit the property intact.

If you are the executer as well as the beneficiary [nb: not 'benefactor'], then I suggest you get legal advice given that you seem somewhat lost. This, of course, will add costs to the the estate.

Either way, inheriting cash or a house will affect your benefits (though not DLA).

Phantom_Avenger

Went to the CAB today. She said she'd never seen a case 'like this'. There is some assets, what do I do next, get them valued???

I'm confused, but I believe I can't be evicted whilst registered disabled? I'm also long-term sick.

googler

If CAB haven't heard of a case like yours, perhaps you should find a legal advisor who has.

Previous poster said seek legal advice - maybe you won't find this at CAB...?

SouthCoast

From CAB:

If the property is to be inherited by someone and there is still an outstanding mortgage on it, the mortgage company will either require the mortgage to be paid immediately, or ask the person who inherits the property to take over the mortgage.
If there is a mortgage on the property, there might be a life insurance policy, an endowment policy, or mortgage protection policy which will pay the outstanding mortgage if the person with the mortgage dies. In this case, you should write to the company, asking for a final statement.
If the property is to be sold, the mortgage will be paid out of the sale of the property.

http://www.adviceguide.org.uk/index/your_family/family/dealing_with_the_financial_affairs_of_someone_who_has_died.htm

Blackpool_Saver

I'm pretty sure that inheriting a house to live in, and it not being a liquid asset will mean it doesn't affect benefits, but I am happy to be corrected if I am wrong ha ha

Phantom_Avenger

Yeah, it doesn't affect benefits. BTW, it's not mortgaged- the 5000 quid was from a loan I'm told.

Raggs_2

If the house is big enough the taking a loan and getting a lodger (to pay whatever the limit of your allowable income is) could be the best plan. Renting it out would give a large income that would impact your benefits. 80 a week is 240 a month, so a loan over 3-5 years should mean that a constant lodger will pay it.

I would guess the last thing you want to do is have to sell the house, as this will give you a large amount of liquid assets that will impact the benefits. A loan and lodger seem to be the best bet.

RAS

You need to wrok out whether you can take a lodger and not affect your befefits or get enough from a lodger to pay the loan and make up for the benefits you have lost.

Phantom_Avenger

Taking a lodger will affect benefits. Anyway the house would have to be in my name first. If I sell the place later, I'll be deemed as making myself homeless. Already been told by the housing people that the will puts me down in the pecking order in their points system. Looks like I may have to stay here/squat it. I'm long term sick and on DLA-partly mental health problems- and being homeless will make me worse. Something has got to give.