Buying siblings out of inheritance property

KLC3

Hi all, looking for advice regarding the best way to go about buying siblings out of inheritance property. Apologies if this isn't the correct category to post in??

We (myself and spouse) are about to inherit a property along with 4 siblings. They have agreed that we can buy them out of the property (I should state we are still in the very early stages). We don't have enough cash savings so will need a mortgage/loan to add to the cash. We have a small outstanding mortgage on our primary residence and want to obtain the inherited property as a holiday home (that we would intend to rent out as a holiday let a small number of weeks a year to help cover costs). 
My question is what type of product should we be looking for? a second residential mortgage taken on the new house?? a buy to let mortgage (or something specific for holiday homes)??.. borrow more against our current house to provide the cash??.. or is there something called Inheritance loans/bridging loans specific for this purpose?? 

Any advice on where to start would be appreciated. I'm going to call our current mortgage provider and ask but worried they'll only offer options they provide as a lender when there are alternatives out there or companies that specialise in this area.

Many thanks

AdrianC

KLC3 said:

We (myself and spouse) are about to inherit a property along with 4 siblings. They have agreed that we can buy them out of the property

Presumably, equal shares, so you'll be buying 80% of the property at full market value?

We don't have enough cash savings so will need a mortgage/loan to add to the cash. We have a small outstanding mortgage on our primary residence and want to obtain the inherited property as a holiday home (that we would intend to rent out as a holiday let a small number of weeks a year

I presume there's no covenant or lease that prevents that?

My question is what type of product should we be looking for? a second residential mortgage taken on the new house?? a buy to let mortgage (or something specific for holiday homes)??.. borrow more against our current house to provide the cash??.. or is there something called Inheritance loans/bridging loans specific for this purpose??

Give us some rough numbers to work with...

The cheapest - and easiest - is likely to be remortgaging your home, if that will raise enough.

I'm going to call our current mortgage provider and ask but worried they'll only offer options they provide as a lender

It would be illegal for them to do anything but.

If you want a whole-of-market view, then you need to speak to an independent broker.

Flugelhorn

when buying property that is going to be used as holiday let etc tends to be easier to remortgage own property if you have enough equity. Presume only one of you is inheriting this - you would have to purchase the house from the executors. 

getmore4less

You can't give consideration when you do a DOV.
 Mickey666 said:

Flugelhorn said:

Presume only one of you is inheriting this - you would have to purchase the house from the executors. 

Assuming the funding is in place, why not just assent the property to the OP and the OP gifts the agreed amounts to the other siblings?  Would save SDLT on a purchase.  Might need a deed of variation to satisfy the estate.

greatcrested

Mickey666 said:

Actually, is a DOV really necessary anyway?  After all, who actually checks if an estate has been distributed as per the will?  Obviously it is the beneficiaries who have a vested interest in the fair distribution of the will.  In this case, there are four sibling beneficiaries.  So imagine they all agree one of them will keep the house and everyone is happy so no one will contest the will.  Is there any process that actually checks the distribution?

No one checks unless someone (usually a Beneficiary) raises an issue.

Plus of course it may depend on the wording of the will. "We (myself and spouse) are about to inherit a property along with 4 siblings." Often here we read this, when in reality the will states that the Estate (or 'remainder' after bequests) is to be inherited equally. If the property is the sole meaningful asset of the estate, lay people often refer to inherting the property when in reality they are inheriting the estate. Most professional will-writers avoid referring to specific properties, since the property might be sold between the time the will is written and the date of death.

getmore4less

Mickey666 said:

Flugelhorn said:

Presume only one of you is inheriting this - you would have to purchase the house from the executors. 

Assuming the funding is in place, why not just assent the property to the OP and the OP gifts the agreed amounts to the other siblings?  Would save SDLT on a purchase.  Might need a deed of variation to satisfy the estate.

Forgot to say connected transaction consideration in exchange for the property SDLT applies.

KLC3

Thanks for the replies. To clarify it is my spouse who will inherit and yes you are probably correct in that its the estate not specifically the house (although the only possession they have is the house). It's also more complicated I think as both parents passed within months of each other; the first parent has a will stating his estate to go to only 4 siblings and not to his spouse who was in a care home at the time. My MIL then passed recently without a will so her estate will be split intestate 5 ways. Care home costs have already been settled without requiring money from the sale of the property. 

We obviously need to speak to the solicitor who is acting as executor regarding how best to go about the legal side of transferring the property into our names etc but I wanted advice more regarding the funding...

Flugelhorn said:

when buying property that is going to be used as holiday let etc tends to be easier to remortgage own property if you have enough equity. Presume only one of you is inheriting this - you would have to purchase the house from the executors. 

Our primary residence is owned and mortgaged by myself (pre-marriage) and we would prefer to borrow more money jointly (I don't think i'd be able to borrow enough based only on my income as I now only work part time). I've included some rough numbers below..
Primary residence is worth ~380K, outstanding mortgage ~70K 
Value of (inherited) property ~200K, spouses share plus cash we could add to it ~75K so we would need to borrow 125K.

Would it all have to solely be in spouses name as he's the actual beneficiary (not 'us').

Thanks again

AdrianC

KLC3 said:

It's also more complicated I think as both parents passed within months of each other; the first parent has a will stating his estate to go to only 4 siblings and not to his spouse who was in a care home at the time. My MIL then passed recently without a will so her estate will be split intestate 5 ways.

How was the house owned? Joint tenants, or tenants in common?

If joint tenants, then the instant your FiL breathed his last, his share of the ownership simply evaporated and your MiL became 100% owner. There was nothing for him to leave to anybody in his will.

If T-i-C, then assuming a 50/50 split, the property was "due" between the deaths 12.5% ea to the four sibs plus the 50% owned by MiL. Then, on her death, 10% each to the five. So it is now 22.5% ea by four plus 12.5% by the fifth. Whether it goes to them as shares in the property or as value is up to the executor/administrator(s).

Our primary residence is owned and mortgaged by myself (pre-marriage) and we would prefer to borrow more money jointly (I don't think i'd be able to borrow enough based only on my income as I now only work part time). I've included some rough numbers below..
Primary residence is worth ~380K, outstanding mortgage ~70K 
Value of (inherited) property ~200K, spouses share plus cash we could add to it ~75K so we would need to borrow 125K.

Given that you're going to need to distribute somewhere between £155k and £175k to the other four sibs, it'd make most sense to simply borrow against your home. Far simpler, and probably cheaper.

Would it all have to solely be in spouses name as he's the actual beneficiary (not 'us').

Thanks again

Once it's bought by you from the administrator/executor(s), then you can register it whoever's name/s you wish.