Buying sibling out

Emmia

captainlongtoes said:

Emmia said:

captainlongtoes said:

So it looks like we may need to sell, and I find myself a home that I can put the approx £300k towards and hope to be able to obtain a mortgage on the rest? Sorry but beyond the very basics of a mortgage I’m new to all of this

Yes, so you'd have £300k deposit (less fees, stamp duty etc.,) you either buy a property which is covered by the "cash" you have, or you buy a more expensive property with the £300k acting as a deposit and a mortgage. 

Banks will normally lend 3 to 4 times your salary as a mortgage, so you could borrow another £100k - £150k or so, giving you a total budget of £400k - £450k for the purchase.  If you did go for a mortgage, the deposit size means you should have a good choice of mortgages as you'd have a good loan to value ratio (LTV) i.e. a £300k deposit would buy you 75% of a £400k property and you'd borrow the other £100k.

However, given your age, you'd probably only be able to get a shorter term mortgage which will push the monthly payments up affecting affordability, since banks still want their money!

To illustrate, if you borrowed £100k over 15 years on a capital repayment basis, it would cost you £630 a month at an interest rate of 1.7% (you'd pay £13,362 in interest over the 16 years) but if you borrowed the same amount over 25 years it would be £409 with £22,820 in interest over the 25 years. (I'm assuming the interest rate stays the same for the whole period, which it won't). 

You may want to go for a fixed interest rate for an initial period (usually 2, 3 or 5 years) which will give you certainty on the monthly payments, but may initially be more expensive than a variable rate (although if rates rise, you'll benefit in the fixed period)

It's probably worth having a play with some of the affordability calculators to see how the numbers work for you - most banks have them available on their websites.

This is very helpful, thank you! I‘ll have a chat with my sibling and do some more fact finding eg stamp duty, insurance, other fees, etc. I’ll miss this place but at the same time I would very much like somewhere to truly call my very own. 

I'd also say, it is a good idea to do the numbers before you go to a bank or broker - go in knowing how much you want to borrow, and have a good idea of the term and monthly payment you'll be comfortable with, given the lifestyle, hobbies etc., that you want to be able to afford after you've bought your new place. 

I did this, but my husband and the bank's mortgage advisor slightly bullied me into an arrangement (a shorter term) that I was only 75% ok with from an affordability perspective - it's ok now as I've had 2 promotions and a chunky pay increase, but I would have been happier with 22 years, rather than 19 years. 

captainlongtoes

I have 24 years before I’m entitled to my state pension, so I wouldn’t mind a mortgage term of 22 years or so and hopefully my career plans will increase my salary gradually over the next few years so I could overpay. I’ve changed bank accounts and credit card recently so it would be better to wait for a few months or so before applying for a mortgage according to Credit Club. Thanks for everyone’s help, I shall do some number crunching, have a think, chat with the family and get up to speed with the ins and outs of buying and selling homes. 

xylophone

I was under the impression I should get the work done to boost it’s value/sellability? If I don’t have to, it would be so much less stressful for me to be honest.

Rewiring is expensive and can be messy so that you end up with a lot of redecoration to do afterwards which is time consuming and expensive.

As long as the place is clean and tidy for viewings and the carpet simply tired rather than worn and a trip hazard, I'd be inclined to put it on the market as "in need of renovation" and accept the hit on sale value.

Mojisola

captainlongtoes said:

I was under the impression I should get the work done to boost its value/sellability? If I don’t have to, it would be so much less stressful for me to be honest.

Price it to take account of the work needed - and make that clear in the advert.

That's what we did with Dad's house - the new owners have been able to make their own decisions about their new home.

captainlongtoes

xylophone said:

I was under the impression I should get the work done to boost it’s value/sellability? If I don’t have to, it would be so much less stressful for me to be honest.

Rewiring is expensive and can be messy so that you end up with a lot of redecoration to do afterwards which is time consuming and expensive.

As long as the place is clean and tidy for viewings and the carpet simply tired rather than worn and a trip hazard, I'd be inclined to put it on the market as "in need of renovation" and accept the hit on sale value.

Yes the carpet is tired and would likely brighten it up enough to not disgust any viewers  

xylophone

Yes the carpet is tired and would likely brighten it up enough to not disgust any viewers  

Hire a carpet cleaner and do all the carpets before viewings?

captainlongtoes

 xylophone said:

Yes the carpet is tired and would likely brighten it up enough to not disgust any viewers  

Hire a carpet cleaner and do all the carpets before viewings?

I was thinking along those lines. I’ve had a chat with my sibling and there’s no immediate rush but we will be doing things like getting rid of unwanted furniture and knickknacks soon.

AnotherJoe

One piece of advice, do not have the house transferred into Your and siblings names. There's no need, It can be sold direct. That way you remain a first time buyer and eligible for whatever FTB's are, never having owned a house before. 

captainlongtoes

AnotherJoe said:

One piece of advice, do not have the house transferred into Your and siblings names. There's no need, It can be sold direct. That way you remain a first time buyer and eligible for whatever FTB's are, never having owned a house before. 

Ok, does the house get normally transferred into our names after probate is complete? We’re still sorting that out, so what’s the usual process?

xylophone

Ok, does the house get normally transferred into our names after probate is complete? We’re still sorting that out, so what’s the usual process?

The house remains in the name of the deceased until the executors either transfer it to the beneficiaries or arrange for it to be sold.

You cannot afford to buy out your sibling and intend to sell it. 

You can sell as  executors  - your solicitor will deal with the formalities.
https://www.thegazette.co.uk/all-notices/content/100719
Current CGT allowance  for an estate is £12,300.