Buying other half of an inherited house

cookie02

Hello, 



My cousins have inherited my aunt’s (their mum’s) house. One of them has decided that they would like to sell their half and move on. Based on her finances, my younger cousin has enough for a 5% deposit on the ‘half house’ which she wants to stay in. This deposit is from her savings (actual savings, not anything relating to their mum’s estate). 

She has a stable job of 2+ years and was promoted and given a pay increase late last year.

According to their probate solicitor, the affairs should be settled quite soon, including the transfer of ownership for the house. Based on the draft accounts, my cousin will inherit enough to cover 2 years’ worth of mortgage payments. This would be added to her ‘emergency fund’ as she plans to pay the mortgage from her salary. She could use this to increase the deposit but says that isn't her first option. My cousins are trying to work out whether they can have this sale/transfer done as part of the solicitor finalising the arrangements relating to their mum’s estate. They realise this would add more fees but think it might be the simplest way to handle the sale and might save money compared with going back to the solicitor for this later. Does anyone know if this is possible please? They have been asking us for advice but we haven’t been able to help much beyond emotional support and pointing them to ask their bank and the solicitor. Both girls are young and, on top of losing their mum, they are both nervous about doing the wrong thing.

The will was very simple, my cousins are the only beneficiaries and everything was inherited 50/50. The older one who wants to sell has lived away from home for some years. The younger one was at home still and has more emotional ties to the house and plans to stay there. There are no other parties involved.

I’d be very grateful for any feedback on sorting out the sale as part of finalising our aunt’s affairs (if this is possible or if it should be handled as a sale afterwards), or if you have any advice on whether the bank will agree to a mortgage on half a house please.

Legally, if my younger cousin is refused a mortgage, could my older cousin sell her half to someone else? My mum is really worried about this as we know the older one really wants to sell and she just wants both of them to be happy with the result when everything is settled.

Thank you.

amnblog

If your late Aunt owned the property solely, your cousins do not own ‘half a house’ each, they jointly own the full house but would be entitled to half the value. Your older cousin can’t sell her half, nor can the younger one mortgage her half.

The younger cousin may be able to buy your older cousin out of the property
subject to raising the funds.

You know your cousins but it sounds like the older should be cutting the younger some slack.

cookie02

amnblog wrote: »

If your late Aunt owned the property solely, your cousins do not own ‘half a house’ each, they jointly own the full house but would be entitled to half the value. Your older cousin can’t sell her half, nor can the younger one mortgage her half.

The younger cousin may be able to buy your older cousin out of the property
subject to raising the funds.

You know your cousins but it sounds like the older should be cutting the younger some slack.

Thank you, Amnblog! We keep hearing all the talk about 'half a house' and it is easy to forget the reality of them jointly owning the whole house. My aunt was the sole owner of the house. There was no mortgage remaining on it and there are no other beneficiaries of her will. Both kids have reacted very differently to their mum's passing - one is very angry and the other is very tearful all the time. They both listen to my mum and dad who are trying their best to be supportive but they are very wary of advising them as they are not familiar with any of this and don't want either to blame them if they feel they have made a mistake with processes etc later. It sounds like the best option will be for them to speak with the bank and the probate solicitor to determine how to raise the funds to do this. Thanks for taking the time to reply

cookie02

Hello again and wishing everyone a Happy New Year

I’m adding to this old thread as my question relates to the same issue, I hope that’s ok.  My cousins’ situation has got worse.  The older one moved back in after spending all her inheritance.  She hates the house, blames my other cousin for her having to move back and has become very violent and abusive (to the point where neighbours have called the police several times and the older one has a criminal record now).  To make things more complicated, the younger one is terrified of how the older one will react if she realises that the rest of our family knows about her behaviour.  The neighbours have been updating us privately.  The older one doesn't realise that my parents know and she continues to be totally charming to them whenever they speak .  My parents are pretending not to know as they are worried that she might hurt the younger one if she blames her for them finding out.  Anyway, on to the MSE-related part of this... 

The younger one had another promotion and a pay rise again in 2020 but it isn’t enough to get the full mortgage amount.  The bank is looking at the mortgage based on the full value of the house, not just on the value of the half that she needs to purchase.  Probate completed last year and the house is in both cousins' names now.  I believe 6 months after probate is the period during which banks are more hesitant to give mortgages for these types of transactions.  There is no question that the younger cousin wants to buy and the older one wants to sell.  They would both be happy with this outcome.  

I know Amnblog advised that the younger one can buy out the older one subject to them raising the necessary funds.  My question is: are there any banks that might consider giving a mortgage for the funds she needs based on the value of half the property vs basing the mortgage calculations on the full property value?  Are there any organisations or brokers that specialise in this type of transaction and might be able to help?  The younger one hasn't touched her inheritance and, in addition to that, she has added to her savings over the last year.  Her pay increase also means that she could easily afford the mortgage payments, if anyone were willing to lend based on the 50% figures.  Is there any way to do this?  The younger one knows that the only alternative is for her to agree to sell.  All of us believe that the older one is deliberately targeting her behaviour to push the younger one to this point.  The younger one has strong emotional ties to the house - it is the only home she has had and all her memories of her mum are tied up with it.  

I would be very grateful for any advice please.  

Thank you 

JGB1955

Surely the younger cousin will be applying for a mortgage on the whole value of the house, less her 50% (or slightly more) equity?  So a 50% (-ish) LTV mortgage. .... or perhaps I'm missing something.....

cookie02

JGB1955 said:

Surely the younger cousin will be applying for a mortgage on the whole value of the house, less her 50% (or slightly more) equity?  So a 50% (-ish) LTV mortgage. .... or perhaps I'm missing something.....

Hi JGB1955, thanks for your response.  I'm not entirely sure what the problem is.  I've seen the valuation, her pay, the deposit amount etc and I'm not sure why no-one wanted to lend to her (she doesn't have a bad credit record or anything like that).  The only thing I can think of is that the lenders wouldn't consider her 50% stake in the house as she contacted them before probate completed and ownership had been transferred to her and her sister.  Since that is all done now, maybe she should just try again.  Thank you

dimbo61

I think the younger cousin should find a whole of market mortgage broker to hold her hand and find a suitable mortgage for her needs.
If they have to sell the property to someone else there would be Selling costs involved IE estate agents, legal costs etc Hopefully the older cousin will take this into account when asking for her " Half " of the house.
Maybe the lady buying the house can get slightly more than she needs to pay her sister and spend the money improving the house ( Depending on its condition )

getmore4less

I did not realise this was a year old on first read.

why no one said at the time the best option is usually...
  
Do not transfer  transfer the property into the beneficiaries names.

Buy it off the estate with a 50% LTV mortgage using the share of the 50% share of inheritance as the deposit.

Would a 50% LTV mortgage been a problem at the time?

The same can be done now it just a bit more difficult as an owners and a broker is recommended that has experience of this sort of transaction.

cookie02

dimbo61 said:

I think the younger cousin should find a whole of market mortgage broker to hold her hand and find a suitable mortgage for her needs.
If they have to sell the property to someone else there would be Selling costs involved IE estate agents, legal costs etc Hopefully the older cousin will take this into account when asking for her " Half " of the house.
Maybe the lady buying the house can get slightly more than she needs to pay her sister and spend the money improving the house ( Depending on its condition )

Thank you for your advice.  She is going to try and find a whole of market broker.  Fingers crossed...  Re: the house, it sounds like you are right and that it will need some work so if she can get slightly more, that will help.  

getmore4less said:

I did not realise this was a year old on first read.

why no one said at the time the best option is usually...
  
Do not transfer  transfer the property into the beneficiaries names.

Buy it off the estate with a 50% LTV mortgage using the share of the 50% share of inheritance as the deposit.

Would a 50% LTV mortgage been a problem at the time?

The same can be done now it just a bit more difficult as an owners and a broker is recommended that has experience of this sort of transaction.

Thank you!  I will keep this in mind but hope I won't need the info in the future!  I used my old thread so the context was there as it relates to the same cousins / issues.  Although this has been dragging on for a while, we weren't aware of the personal issues until very recently.  My cousin's finances aren't that different now as she's never included her inheritance in the mortgage discussions with various banks.  She just told them the value of this expected amount and that it would be enough to cover the mortgage repayments for around two years.  She didn't want to add it to the deposit as she preferred to keep it in case of any issues with her job.  I'm not sure if she actually said this last part, if so, maybe that was part of the issue.  We are trying to help her find a broker as it sounds like that is the best way forward now.  

Thank you both for your help 

getmore4less

Old thread is the right thing to do

What needs to happen is find out how much she can raise as a mortgage. based on income.


As long at that is more than 50% then she can keep the excess cash back.
The rest of the inheritance would not need to be touched if she can raise 50%+ of value

Typically you would aim for at least a LTV of 80% or better  75% is good 60% gets best rates 

By trying to buy at full value with a 5% deposit / 95% LTV she has made a dogs dinner of this.

All that happens is she is borrowing more money to put in savings.


Still possible, get a broker on the case. 

What's the income and house worth that will give a clue how tight this is.

gwynlas

The other issue is to ensure vacant possession so that the cousin selling her share who's already spent her initial inheritance does not try to bully her sister into letting her remain in the family home as a lodger or guest otherwise she will mever ger her out. On completion your house owning cousin needs to change all external locks and possibly take out a restarining order given history.