mortgage advice - part share in inherited house

DianeM

Hi all, hard to describe in title but thanks for any advice.a
My mum and dad passed away in May and along with my 4 brothers we have inherited the property - which was already in our names.

My daughter is looking to buy the house and I am happy to leave my share as deposit and she knows that this is a percentage ownership.

She works as a Teaching Assistant/Learning support but is only on temporary contact until March, likely to get renewed but not definite!

What is the best way to help her get a mortgage - legally? Should I get the mortgage and she pay me or a joint mortgage.... Have no idea where to start.

We (mam and dad) have two years remaining on our mortgage so I am not sure if I can get another in my name with her or to be a guarantor (is that still something you can do?)

She has saved £10,000 saved and her car is paid for so no debt.

An independent mortgage advisor couldn't find one so we are at the banks this week.


Any/all suggestion welcome :-)

holly_hobby

Firstly, sorry for your loss, it must have been dreadfully difficult losing both parents in a short time frame - hope that things are looking better for you all x

Moving to your post ....

Inherited property is curently jointly owned by you and 3 siblings.

Your Daughter wants to pch the property (ie buy it from you and your 3 siblings).

You don't want any monies from the sale, instead you are happy to gift her your share in lieu of a deposit (which would be fine and come under a family sale/preferred purchase arrangement).

So your D. therefore needs a mge for 3/4 of the value of the property to effectively "pay" your siblings their share of their inheritance from Mum & Dad.

Thats the bones of how you would present this to a broker .... the issues however are your Ds employment.

Under a contract, lenders ordinarilly want this to have been renewed at least once, with a gte of a futher renewal and in an occupation that is fairly sought after (teaching is a professional occupation, with plenty of supply and agency work, so that will help).

Guarantor mges are about - and there are lenders whom could be approached, the lender will want Ds income to stack up on its own, and a planned schedule for when she will expect to be in a position to release you as guarantor. (your broker will discuss this more fully with you)

Alternaively, why not rent it to her, until she is in perm employment (had her contract renewed at least once) then her apply for a mge to pch from your siblings ?

Hope this helps

Holly

DianeM

That's basically told me what I need to know - many thanks. I'll print this off and take it to the bank. Our m advisor basically said no one was interested.
Ps really hard about parents, even cried last night but on the whole life goes on x

Dave_Ham

Terrible to lose one parent, but your situation is horrific and I imagine trying to keep the house in the family (your daughter) is dear to you.

I am amazed an independent broker could not find any solution, although I fear a trip to most banks would be fruitless. Whilst there are guarantor mortgages, these are few and far between now and also are embroiled in red tape.

I would consider exploring the following solutions:

• Depending on your ages (not daughter) either buy the property with her as the 3rd applicant (they will not use income in any case) and then she can remortgage you off in x years
• Dependent upon ages and value of your own property (and income), raise 75% of the value of parents property on your own mortgage (residential) and buy out your siblings
• Not dependent upon ages, you could buy your parents property as a buy to let and rent to your daughter, until she can afford to buy. Depending upon value there are stamp duty considerations here.

These are the very highlights of the potential solutions and any solution would need to be looked into in more detail for sure.

Suggest a trip to a more experienced broker, although be interested in your experience on the highstreet.

I wish you well...

holly_hobby

Yep as Dave says you could be involved in the mge/pch yourself, either by Joint applicant or via a remortgage on your own home.

I didn't mention this because of the age factors, available free equity, and the fact that you would also be legally responsible for servicing the mge (although to be fair that remains with a guarantor arrangement too) PLUS your own home would be exposed to risk of possession for any non-payment of mge, which you/your Hubby may not be comfortable with.

If you are securing any mge in your name on the inherited house to effectively "buy" your siblings share (be that under a residential mge, where ages an income are a real factor, or a REGULATED (as rental is to a family member) BTL mge for daughter to rent), then this will be a classed as a unencumbered (mge free) remortgage. It will be classed as a remortgage, because you are already the legal owner of the property (albeit currently with 3 other individuals). LTV will be limited to 75% as a first time landlord, which is fine as its only 3/4 of the value that is reqd to settle with your siblings (i.e 1/3 each), as your share is forming the deposit, you will also have to submit annual self assessment for the rental income - the usual BTL criteria will apply to the rest of the case.

SDLT will apply if the pch share from your siblings exceeds the nil rate band of 125k.

There are still guarantor mges about, ideally you don't want to go that route because of the release issues, but it remains an option.

As Dave H says, the broker does not sound in the least experienced or knowledgeable, finding one may be feel like a needle in a haystack, but look for someone who has been in the industry for a good few yrs (or works with others whom they can bounce this off), as over that time they should have come across most situ's, and therefore know from experience how to play it and whom to approach for the desired result. Naturally their service may well incur a professional fee, but worth it I feel given the poor advice you're already received in the matter.

Hope this helps

Holly