Releasing the equity from an inherited property with shared ownership

mandycurl

Hi guys, not sure if posting in the right area - please redirect me if I am.

My Mum passed away 4 years ago. Partner remains in property - they were tenants in common. My mum left myself and my brother her share of the property. Probate all complete. 

My question is - is there any way I am able to use my share of the property as collateral to buy the house myself or use it to gain a mortgage on another property!?
I am privately renting, have no funds for a deposit but a good credit rating. My goal is to get on the property ladder myself, I’m unable to qualify for any govt initiative eg help to buy, first time buyer schemes.
I’m not in a position any time soon to raise a deposit for a mortgage!
My salary is £35,000. House is worth £230,000. So my share is 25%.
Hope I’ve explained myself - I’ve searched and searched for an answer and my next option would be to contact a mortgage adviser. 

Thank you!

AdrianC

You are already "on the property ladder". You own 25% of a £230k house - £57,500 equity.

You and your joint owners would need to mortgage the property, and you use that money - although that's likely to count against you when asking any lender - simply because of being pre-existing borrowings.
Or, if they don't want to do that, then you ask them to buy your share out - this would also be the best option because of the +3% Additional Property SDLT you would need to pay on your home otherwise.

If you earn £35k, roughly £2,250/mo after tax, how come you can't save anything?

oldbikebloke

tenants in common so her partner has absolute ownership of a clearly defined share of the property 

Reality check time I'm afraid...
- any mortgage/loan secured on that property would have to involve all the owners of it as no lender would accept an owner not party to a loan secured on the property they co-owned.

- collateral requires the ability to sell the item if you default. Your share would not be accepted as collateral as it is worth effectively nothing on its own since you cannot sell 1/4 of a house someone else owns and lives in

- above average salary but no deposit. Time to review your priorities in life and decide if you want to adjust your lifestyle to save money to "get on the ladder" or carry on spending 
.

mandycurl

AdrianC said:

You are already "on the property ladder". You own 25% of a £230k house - £57,500 equity.

You and your joint owners would need to mortgage the property, and you use that money - although that's likely to count against you when asking any lender - simply because of being pre-existing borrowings.
Or, if they don't want to do that, then you ask them to buy your share out - this would also be the best option because of the +3% Additional Property SDLT you would need to pay on your home otherwise.

If you earn £35k, roughly £2,250/mo after tax, how come you can't save anything?

Yes, it’s nice to know I have a future investment and am on the property ladder I just can’t use the ladder right now!:)

There’s no option for other joint owners to make movement aside from mums partner to sell - I will just have to wait!

Yes, I save a little each month...but I’m 42 and probably won’t be able to save a 10% deposit for many years!
Thank you for your advice!:)

mandycurl

Considering there’s little option for me in regards to original post, would my situation with the property have any negative impact on me taking out a mortgage in the future?

AdrianC

mandycurl said:

Considering there’s little option for me in regards to original post, would my situation with the property have any negative impact on me taking out a mortgage in the future?

No, but it won't help either.

TBagpuss

Did your mum provide for her partner to have the right to live in the property fter her death?

If so, then other than asking if the partner is interested in buying your share of the property, there's nothing you can do.

If not, then you *could* look at forcing a sale to release your share of the equity, but of course that would have repercussions in terms of your relationship with the partner, and could be expensive and time consuming. 

longer term, it shouldn't either help or hinder you in getting a mortgage. You are likely to have CGT to pay when the property is eventually sold and will have to pay higher rate Stamp Duty when you buy, as you already own a property. 

getmore4less

Did the will give the partner have a right to live in the property?

MovingForwards

Save more and look for a lower priced property which is one you can afford.

Many people make compromises if their aim is to buy a property. 

mandycurl

TBagpuss said:

Did your mum provide for her partner to have the right to live in the property fter her death?

If so, then other than asking if the partner is interested in buying your share of the property, there's nothing you can do.

If not, then you *could* look at forcing a sale to release your share of the equity, but of course that would have repercussions in terms of your relationship with the partner, and could be expensive and time consuming. 

longer term, it shouldn't either help or hinder you in getting a mortgage. You are likely to have CGT to pay when the property is eventually sold and will have to pay higher rate Stamp Duty when you buy, as you already own a property. 

Yes, the partner has the right to reside in the property. 

I am now resigned to the fact I have to wait for her partner to sell to utilise my share.
Would the stamp duty be a significantly higher percentage than normal? 

Thank you for the reply!  

mandycurl

getmore4less said:

Did the will give the partner have a right to live in the property?

Yes it did.