Advice on interest only loan

charlievalentine_2

Hi All,

I am after some advice please if possible. My parter inherited a house a couple of years ago. It is in his name with no mortgage. However, it has always been the agreement that half belongs to his brother. It has been on the market for £70000 with the agreement that if it sold it would be £35000 each. It is currently vacant and needs a little work. We would like to live it it and have heard from an accountant that we could get an interest only loan to pay off the brother his half. However, I can find any mention of this when looking on the internet. I can only find reference to a interest only mortgage...but my partner already owns the house. Any ideas or advice very welcome.

Thanks for taking the time to read

[Deleted User]

he could get a mortgage for the 35k,does he already have a mortgage?although it has to be said that interest only mortgages arent as freely avaliable as they were,maybe a chat with a "whole of market" mortgage broker?

Tixy

The accountant means taking out an interest only mortgage on the property. Mortgages are not only to buy property but also you can remortgage a property you own to release equity.

As a separate issue if your partner legally inherited the house entirely then chooses to give his brother 35k or half the house he could have an inheritance tax issue if your partner dies within the next 7years. Hopefully your accountant will have already explained this but if not I would talk to them about it so you understand if it could have an effect.

CLAPTON

why an interest only mortgage
how do you plan to repay the 35k?

just get an ordinary repayment mortgage for a normal mortgage provider

charlievalentine_2

Thank you so much for the quick replies. My boyfriend owns the house outright so there is no mortgage at present. I think the accountant suggested an interest only loan so we can pay the brother off and live there quite cheaply (£200/month) while making some improvements with a view to selling and paying off the principal sum in the future. I am very inexperienced in these matters but the idea sounded great when he put it like that!
If I understand correctly, can we get a mortgage for a house Roy already owns? I thought we would be looking at a secured loan? Or is this the same thing?
Any ideas who we should speak to?

Thanks again for the helpful responses.

paddyrg

You need to speak with a real IFA about this - there are issues like inheritance tax, maybe even CGT of some sort - get this wrong and you'll pay thousands more in tax than you need to.

CLAPTON

Go visit a suitable high street mortgage company or a broker and say you want to mortgage the house to raise 35k.

Personally I would go for a repayment mortgage so you are slowly paying the mortgage off don't have to sell it later unlesss you really want to

Presumably his income and general situation make him eligible for a mortgage of 35K (regular income, decent credit files etc)

Then he can give his brother 35k
Its as simple as that.

ViolaLass

It's worth bearing in mind that a house is only worth what someone will pay for it. If it won't sell at £70k, is it fair for the brother to receive £35k? By extension, have you considered how much the house might be worth once you've done whatever works you think need doing?