Mortgage to buy out siblings from inherited property.

pltylr

Hi Everyone,
Sorry to start a new thread but I've been searching and googling but can't find anything that covers this particular scenario.
My mum passed away and left her mortgage free property split equally three ways to each sibling A,B,C. Apart from 11.4% of the property that two of the siblings (A&B) paid for when the property was purchased, 5.7% each). This is registered under a deed of trust in the name of my mum and siblings A&B detailing the percentage owned.

Sibling C who has inherited 29.53% of the property wishes to buy the other two siblings (A&B) percentage of the property and live there as her only residence. Sibling C has been living at the property for 2.5 years whilst my mum was ill and sold her property in Nov 2020. Sibling C has cash (equity) from that property to put towards a deposit to buy out the other 2 siblings (A&B).

Everything is agreed and amicable between all siblings but the issue is that the mortgage company (Natwest) are insisting that Sibling C's name needs to be on the deeds before they will give her a "re-mortgage". Both solicitors involved, one for A&B and one for C agree that this isnt required at this point as that would add time & expense to a straight forward "Transfer of Equity". 

Is there something myself and both solicitors are missing regards to Natwest's remortgage blinkers? Sibling C wishes to use Natwest as they use her wages inc OT to calculate how much they will lend her. Sibling C was previously with Clydesdale Bank and had to pay a hefty ERC to leave which she would get back if she took out another mortgage with them but they dont include overtime in their calculations.

Any advice gratefully received.

getmore4less

Buy the house off the estate.
a 29.53% + whatever cash she wants to top that up with from her sale deposit.

It should be a regular mortgage no issues

How much income and how much is she trying to borrow.  does she really need the overtime?


Did A&B live in the property as they may have a CGT liability for their shares

pltylr

Sibling C earns roughly £32,500 pa inc OT (£29,750 before OT) has £22,000 equity and we have agreed the property is worth £220,000 so her share of it is worth roughly £65,000.

Siblings A&B never occupied the property at all, just my mum originally joined by sibling C when my mum became ill.

getmore4less

Has £87k  needs to raise £133k  4.5 multiple on close to 60% LTV. (short £1k)

With the ERC back is this not possible with Clydesdale?

MWT

pltylr said:

... and we have agreed the property is worth £220,000 so her share of it is worth roughly £65,000.

You will need an in independent valuation for the CGT liability for A&B and of course the lender will do their own valuation. 

pltylr

getmore4less said:

Has £87k  needs to raise £133k  4.5 multiple on close to 60% LTV. (short £1k)

With the ERC back is this not possible with Clydesdale?

Clydesdale won't include the OT in the calculations i believe which is why sibling C has moved on from them.

pltylr

MWT said:

pltylr said:

... and we have agreed the property is worth £220,000 so her share of it is worth roughly £65,000.

You will need an in independent valuation for the CGT liability for A&B and of course the lender will do their own valuation. 

I believe Natwest have surveyed the property for the "re-mortgage" and are happy with the figures involved but they require sibling C to have her name on the deeds to progress. 

davidmcn

pltylr said:

Sibling C who has inherited 29.53% of the property wishes to buy the other two siblings (A&B) percentage of the property 

So it's a purchase, not a "remortgage". Is that where the confusion is coming from?

p00hsticks

pltylr said:

MWT said:

pltylr said:

... and we have agreed the property is worth £220,000 so her share of it is worth roughly £65,000.

You will need an in independent valuation for the CGT liability for A&B and of course the lender will do their own valuation. 

I believe Natwest have surveyed the property for the "re-mortgage" and are happy with the figures involved but they require sibling C to have her name on the deeds to progress. 

As MWT has said, it's not just the mortgage company that need to be happy with the valuation - it needs to stand up to HMRC scrutiny for siblings A&B to report / pay the relevant CGT on the sale of their existing shares.

getmore4less

pltylr said:

getmore4less said:

Has £87k  needs to raise £133k  4.5 multiple on close to 60% LTV. (short £1k)

With the ERC back is this not possible with Clydesdale?

Clydesdale won't include the OT in the calculations i believe which is why sibling C has moved on from them.

the overtime is £2750.
£133k/£29,750  = 4.47 x  
£133k/£32,500 = 4.09 x

Clydesdale base lending criteria look ok for without the OT, its tight. but if the other affordability stacks up and 60% LTV, maybe  the valuation was lower.  
 

In considering any application our primary consideration is based on your client’s ability to repay the mortgage loan both now and in the future. The amount we will lend to an applicant is based on assessing affordability by taking account of income, regular commitments and living expenses.
In addition to conducting an affordability assessment, we are unable to lend more than 4.49x the allowable income where:

• The loan to value is over 85%; or

• Total allowable income is £50,000 or less

In addition to basic pay, 100% of pension, rental and allowable benefit income will be used in the loan-to-income calculation

Might be time to get a broker on the case as this should be a purchase not a re mortgage.