Inheriting Properties with mortgages

dapearson87

Looking for a bit of advice, My father recently passed away leaving my siblings and I (3 of us) 11 mortgaged properties. Each have about 80% of their value mortgaged.

A couple of the properties mortgages are up in 2016, which at that time, as understand it, will need to either be paid off or transferred into new ownership and new mortgages issued. The solicitor believes that the mortgages are likely to now be frozen for 6 months which time you have around 2 years before the mortgage companies like to see the properties transferred into the beneficiaries name, new mortgages issued or sold and mortgages repaid. We are currently deciding whether they would like to keep them and earn a income from them or whether they should sell. We’re all leaning towards keeping them, is there a chance we might be forced to sell by the mortgage company? Do you have any information you could provide on how this process works?


The lender obviously has the option to allow the beneficiaries to take on the loan, but how does this normally work - would they have to apply as you do normally for a mortgage? Is there a better way to do it? I presume the income from the individuals and the income from the properties would be taken into consideration, would it be better if there are more people jointly applying, or in this incidence does it not matter? There’s also the decision about whether we keep them joints (possible as a LTD company) or split them up between ourselves

Any way a lot of questions that we do not have the answers to at the moment. If you have any experience in this area and are able to shed any light it would greatly appreciated.

p00hsticks

Presumably these are 'buy to let' mortgages ?

dapearson87

Sorry, yes all BTL

getmore4less

Its a business do the numbers to see if it is profitable.

Letting business with three people needs some serious thought, they are fraught enough with just couples.

Unless there is other complications with the estate this should be done in 6 months year max.

I think 2 years before the lenders get itchy is stretching it.

Doubt they will freeze the interest, they may allow deferred payments but interest could be accumulating

Why do you need the mortgages freezing the rental income should be covering them.

I would get a broker to have a look at the new mortgage possibilities.

default new lending would be 75LTV 125% rental, the existing lenders may look transferring existing lending.

dapearson87

Thank you.

As far as transferring the lending/getting a new agreement what is the criteria like, is it as stringent as First time buyers/mortgages for your own home? Or does the fact that they are all tenanted negate anything else?

All three of us have our own properties but I know my brother had trouble initially getting his.

getmore4less

Get the facts first.
rough estimate of property values.
Current maintenance status.
rents.
current tenants terms
costs
Mortgage LTV rates and terms
are all the certificates upto date.
gross yields, net yields
etc.

basic standalone BTL lending, 75LTV and 125% coverage if interest at 6%

if they don't stack up on that

THe executors will have to start looking after them, if you are employing/using solicitors for the etstate this could get expensive, might want to look at taking that over for the period of administration, that will fall over 2 tax years as well as the tax return to date of death, least this way you start to get a feel for what being a landord means.