inherited property with mortgage

lampshade83

Hello,

I hope someone can help.

I was left a property in my father's will (just me, no siblings). Me and my husband were already living in the property with him when he passed away. Neither of us have owned a house before.

It has an outstanding mortgage of £71k and the property is worth £600k.

We want to continue living here and have been offered a mortgage of 68k.

To be honest I didn't think we'd be accepted for the mortgage, I thought we would have to sell... so now I'm just worrying that things are going to go wrong as our dream of staying here seems so near, yet so far.

We have instructed solicitors who have sent us forms to fill in about the people currently living in the house, what's included in the purchase etc. I'm finding it all a bit confusing as we are the people living here and everything included is obviously our own stuff? I have emailed them to clarify our situation but I'm just so nervous that we're going to hit a stumbling block and I'm finding the whole 'buying a house' thing very daunting and confusing.

Can anyone explain what happens next in our situation? everything I've read talks about exchanging contracts, moving etc.

Will our mortgage provider pay the money directly to the bank that has my dad's outstanding mortgage? and then we pay the extra?

What exactly do the solicitors do - put the property into our name once money has been paid?

Will we have to pay stamp duty?

How long will the process take roughly now we've been offered the mortgage and we're ready to go ahead?

Thank you if you've got this far!

Tom99

[FONT=Verdana, sans-serif]Have you applied for and obtained probate yet? At £529k your fathers estate is into inheritance tax levels unless he inherited a previous spouses Nil Rate band.[/FONT]

lampshade83

Yes I have grant of probate

G_M

Who is/are the Executors of his will? You? The solicitor?

I asssume the Executor, whoever that is, has paid the inheritance tax out of the Estate?

The Executor now has to pay off the other debs of the Estate - in this case the existing mortgage. If the Estate has other assets (eg savings, investments) that can be used to pay off the mortgage.

If the Estate has no assets, you can pay off the existing mortgage. I assume that is what you are ding. To do this you are yourself applying for a new mortgage yes?

Once your new mortgage is arranged, the Executor can use that money to
* pay off the existing mortgage and
* transfer ownership into your name

I believe SDLT might be payable on the amount of the mortgage, but I'm not sure, though at £68K that would be £0.

Assuming as you say your mortgage has been agreed, and the Executor has been granted Probate, there is no reason not to proceed.

paddedjohn

Have you checked to see if your father had any life insurance linked to the mortgage?

lampshade83

Thank you both yes that's all correct, everything is settled and paid including some minor debts with utilities etc it's literally just the outstanding mortgage remaining. We applied for a new mortgage ourselves and were offered it Monday. Neither of us have had a mortgage or owned a house before.

Unfortunately he did not have life insurance, I was really shocked to be honest that had a mortgage without one as I thought it was a requirement but we found nothing in all his paperwork and Santander who the mortgage was with said he had taken no protection out

thelem

How much cash do you have? There's obviously a £3k difference between the mortgages that will need to be paid, plus other costs that could end up being significant (stamp duty, inheritance tax and conveyancing fees). You need to find out what those costs are to make sure you can afford the property.

Also bear in mind that you will need enough income to maintain the property - there's no landlord to fix the boiler or roof when it breaks. If your maximum mortgage is £68k, then a £600k house might be a bit much for you to maintain. Would you be better off selling it, buying something cheaper and investing the rest so you've got money to cover those big repair jobs?

G_M

lampshade83 wrote: »

Unfortunately he did not have life insurance, I was really shocked to be honest that had a mortgage without one as I thought it was a requirement

Absolutely no requirement for life insurance.

He appears to have no dependants

- I assume you mother has pre-deceased him, or they divorced?
- his only child is adult and married

and there is a lot of equity in his property, why should he need insurance? Yes, you'll have to take out a mortgage if you want to keep his property, but there's a lot of equity there. and if you chose to sell, you be inheriting significant cash.

lampshade83

We have around 8k in savings and can borrow more if needs be for stamp duty etc from my husband's mum. Affordability wise we earn around 34k combined and were told we could have borrowed more based on our income and outgoings if we had better credit histories.

We've lived here for around 10 years so we're quite familiar with the upkeep etc. my dad was living off his pension so we have always maintained the property since living here, paid him rent which was over double what our mortgage payments will be, paid towards bills etc. We have had the house replastered and decorated, replaced the boiler around 2 years ago etc. It's not that big a house, we're just in an expensive area!

Tom99

There will not be any stamp duty.

https://www.gov.uk/tax-property-money-shares-you-inherit/property

lampshade83

I was only shocked because I (wrongly) assumed you had to have life insurance and buildings insurance with a mortgage. Trust me, I know how incredibly lucky I am and am so, so grateful for this. Although I'd swap it all today to spend some more time with him. He was my best friend as well as my dad and I feel like a piece of my heart has been ripped out. But yes, I am extremely fortunate to be in this position