Inherited a house, what is for the best?

dimbo61

Another vote for selling the property and splitting the money 50/50 after sale costs.
Pay the max allowed this year without being hit with ERC,s
Invest in cash ISA,s and regular savers,
Check if you can reduce the term from say 25 years down to 2/3/5 so your mortgage payment goes to £10,000 a month.
It cost me £50 to do this with my lender.

conradmum

You don't need to decide all this at once. You only need to decide whether you want to sell the house or not first, and you need to make that decision with your sister. I get on well with my siblings but I wouldn't want to be joint landlords with them (or anyone else). Being a landlord has lots of pitfalls too, so it makes sense to sell the house. Assuming your sister wants to do the same, that will take a while to happen so you have plenty of time to consider what you'd like to do with the money.

xylophone

In your position I'd try to persuade my sibling to sell - it seems to me that being a landlord, worse joint landlord, means entering a vale of tears in a world of pain:eek:

Clean break, deposit the money in NS&I for a few months and consider your options?

Retro82

dimbo61 wrote: »

Another vote for selling the property and splitting the money 50/50 after sale costs.
Pay the max allowed this year without being hit with ERC,s
Invest in cash ISA,s and regular savers,
Check if you can reduce the term from say 25 years down to 2/3/5 so your mortgage payment goes to £10,000 a month.
It cost me £50 to do this with my lender.

The maximum we're allowed to overpay per month (without changing the product, and we're still in our 3 year fixed rate!) is £500. Is there any advantage to using the money to make the max overpayment every month when we probably intend to sell in the next 3 years or so anyway?!

Is it still better to use that money to pay down the mortgage as much as possible? Is that preferable to just having the money in our bank account when it's time to sell?

Retro82

xylophone wrote: »

In your position I'd try to persuade my sibling to sell - it seems to me that being a landlord, worse joint landlord, means entering a vale of tears in a world of pain:eek:

Clean break, deposit the money in NS&I for a few months and consider your options?

I think you're right. I'd seen a rental income as a bit of a safety net/financial security. But just having that money in our account would be a pretty big safety net!!

Kynthia

Retro82 wrote: »

The maximum we're allowed to overpay per month (without changing the product, and we're still in our 3 year fixed rate!) is £500. Is there any advantage to using the money to make the max overpayment every month when we probably intent to sell in the next 3 years or so anyway?!

Is it still better to use that money to pay down the mortgage as much as possible? Is that preferable to just having the money in our bank account when it's time to sell?

It depends on whether you make more in interest in savings that you pay in interest on your mortgage. Plus whether you need any cash readily available in your savings, whether your savings will exceed the amount protected should the bank fail, etc. As I said earlier it's also really worth considering whether your pensions could do with looking at as this is a tax efficient method of investing and other safe long term investments have better rates of return. An Independent Financial Advisor is where I would go.

getmore4less

£1200pm on a £300k house is gross yield of 4.8%.

net yield after tax ?

whats your mortgage rate.

Joint landlord with a family member, do you realy want to start a business with them?

As you do not want the place long term I would sell

As a business it is too marginal and no long term personal value not worth keeping unless there is some other comercial reason, like areas has potential or sis wants it and can buy you out later.

Retro82

getmore4less wrote: »

£1200pm on a £300k house is gross yield of 4.8%.

net yield after tax ?

whats your mortgage rate.

Joint landlord with a family member, do you realy want to start a business with them?

As you do not want the place long term I would sell

As a business it is too marginal and no long term personal value not worth keeping unless there is some other comercial reason, like areas has potential or sis wants it and can buy you out later.

Mortgage Rate is currently 3.9% (currently on fixed rate, due to go up slightly in 18 months but we'd probably shop around for a better deal at that point anyway).

duchy

So you could overpay at the rate of £500 a month without penalty ?

If you did make one big down payment -how much would the fees be -and would the interest saving offset the fees? If you have to move to a new product to do so-what would that do to your repayments ?

Don't assume something will be more (or less) check.

Herzlos

Exactly. You need to consider the fees compared to the savings. Even if the fees are a £9k, (3% of mortgage), you'd save approx £7800/year in interest by overpaying by £150k, and the fees would presumably break you out of the contract allowing you to look for a new rate at 33% LTV instead of 66% LTV so allowing you to get the best rates.

Obviously pay off anything else before the mortgage though - any credit cards or loans as they'll be a higher rate.

Then you can still upgrade in a few years with £150k (+ saved interest) more equity.