Buying out sibling with loan on inherited property

towner

My mother in law owns her bungalow outright (worth ~£200k) & on her death, it will pass in equal shares to my DH and his sister. The sister has never owned her own place (she is 59 now) and is quite adamant that she wants the bungalow and that there would be no problem in her getting some sort of equity release loan to buy out my husband on her mothers death.

I don’t think that this is likely, but is it? She earns under £20k and her partner is on state disability benefits. Anyone know??

I am trying to get things straight in my mind before anything happens to mother in law and DH gets bulldozed into letting the sister just live in the property forever more.

Cara79

Hi,
I'm not an expert but on MIL's death, I would suggest getting 3 valuations & then ur SIL & dh agree the price he will sell at. So if ur MiLs house is worth 200k then she would bed to buy him out at 100k.

On 20k salary she won't be able to afford a 100k mortgage. That would be 5 x salary

towner

Would it only be a mortgage that she would be able to get? She has never had a mortgage before and is already 59, I wouldn't have thought she stood the proverbial cat in hells chance of getting one.
She is on about one of these equity release things where the loan company takes on a % of the property until your own death (or something like that I think?!)

McKneff

It might be easier if she just lived in the property and gave your OH half of the market rent, or is that a non starter.

towner

Had though of that but I'm sure we could use the money ourselves (travelling the world in a campervan - oh how idyllic!) Well, you know what I mean.

fluffymuffy

Get MIL to sell up and move in with you to enjoy her twilight years being waited on. That's a fair return for £100K

xylophone

If your mother-in-law is in good health, it could be a number of years before she dies?

Your sister-in-law could herself be retired by then and this might well mean difficulty in obtaining a mortgage.

Even if MIL died sooner rather than later, unless SIL has a substantial deposit, a mortgage for £100000 wouldn't seem to be on the cards?

It might be as well if MIL's will specified that the bungalow was to be sold and the proceeds divided between the siblings, rather than leaving each a half share in the property.

That way, if the sister were in a position to buy out her brother she could do so - otherwise she'd get half the proceeds and would have to make her own arrangements?

McKneff

Apart from anything else, mum could well need care when she gets older so its all up in the air at the moment.

towner

Yes, she is fit and well at the moment (thankfully). She has stated in her will that the property is to be sold and distributed equally between the 2 of them. As she has stated that, does the property therefore have to be sold or can SIL still try to buy DH's half? Thinking of all eventualities here.
Care issue - actually yes, this is what has prompted me to post in the first place. SIL is offering to move herself and DH into the 1 bedroomed property to look after MIL when the time comes, but it is making me worry that SIL has an "agenda" to get into the property before MIL passes & this would make things difficult.

googler

towner wrote: »

Yes, she is fit and well at the moment (thankfully). She has stated in her will that the property is to be sold and the proceeds distributed equally between the 2 of them. As she has stated that, does the property therefore have to be sold or can SIL still try to buy DH's half?

If the will states the property is to be sold and the proceeds of sale (my addition to your quote) are to be divided equally, that's what the executor has to do.

It's the best way. You don't have to read very far back in this forum to find another thread where family members are squabbling over whether or not to sell, how much one can buy the other out for, etc.

It's best for the will maker to remove all doubt from their wishes, and to structure their will to avoid family members fighting over the estate.....

Better_Days

Who are the executors of the will?

If SIL is one of them she could delay things by refusing to accept reasonable offers for the property.