Family home after death.

JohnFTB

I was after some general advice. This issue seems a complete minefield!
My dad passed away recently. In his will he left his wife £30,000 (some of which will come from the sale of the house).
The house was then to be split between his three children equally. He wanted his wife to stay in the house for 2 years (nothing legally binding, just a wish)
The house is worth £200,000 and the mortgage has £90,000 left.
I currently own my own home but want to buy the family home to live in eventually.
Could me and a sibling get a mortgage for £90,000 pretty much taking over the current one, allow his wife to live there for 2 years covering the mortgage then sell it to me for £200,00 then.
Or would I need to get a new buy to let mortgage for the full £200,000?
The stamp duty, do I pay the stamp duty up front on the full house or is it a lesser amount on an inherited property? I'll get this back when I sell my house but its an upfront cost I could do without.
Also with regard to my own equity in the house, can this be used as part of the deposit or would I need to put cash down then receive my share after?

AdrianC

There is no SDLT on an inherited property.

Between the three of you, you're going to need to pay £90k into the estate to clear the mortgage. How you fund that is up to you. £90k mortgage on a £200k property is only 45% LtV, so it shouldn't be too hard to raise, assuming you have sufficient income.

If you want to buy out the shares of your siblings, then you're going to need to pay each of them a third of the value - so £67k at the current value. If you want to do that now, then offset the mortgage against it - you raise the £90k alone, and pay £37k to each of the other two sibs. There would be SDLT on the shares you buy from your siblings - but not if you pay the money into the estate and the property is transferred to your sole ownership now.

elsien

Does his wife want to stay there for 2 years - might be a bit early to say as yet but she may wish to move on sooner.
If she is staying there and paying rent to cover the mortgage then that is likely to make you and your siblings landlords, with all the responsibilities that that entails so you would need to check you understood the implications of that for all or you. 
If you wish to buy the house, then your share of the estate would be the equity and you would need a mortgage to cover however much is needed to pay the other beneficiaries their shares. Whether that would need to be BTL or not would depend on how the situation with the wife staying in the house pans out. 

xylophone

What does your stepmother think about moving out of the property to a home of her own at some point within the next six months or so?

As you want to live in  your father's old house, had you considered selling your own home now and buying  his house from the estate?

This would enable to you pay your stepmother that part of her  bequest that cannot be met from the cash in the estate and pay your siblings their inheritance.

JohnFTB

AdrianC said:

There is no SDLT on an inherited property.

Between the three of you, you're going to need to pay £90k into the estate to clear the mortgage. How you fund that is up to you. £90k mortgage on a £200k property is only 45% LtV, so it shouldn't be too hard to raise, assuming you have sufficient income.

If you want to buy out the shares of your siblings, then you're going to need to pay each of them a third of the value - so £67k at the current value. If you want to do that now, then offset the mortgage against it - you raise the £90k alone, and pay £37k to each of the other two sibs. There would be SDLT on the shares you buy from your siblings - but not if you pay the money into the estate and the property is transferred to your sole ownership now.

Thanks that's very helpful

JohnFTB

elsien said:

Does his wife want to stay there for 2 years - might be a bit early to say as yet but she may wish to move on sooner.
If she is staying there and paying rent to cover the mortgage then that is likely to make you and your siblings landlords, with all the responsibilities that that entails so you would need to check you understood the implications of that for all or you. 
If you wish to buy the house, then your share of the estate would be the equity and you would need a mortgage to cover however much is needed to pay the other beneficiaries their shares. Whether that would need to be BTL or not would depend on how the situation with the wife staying in the house pans out. 

xylophone said:

What does your stepmother think about moving out of the property to a home of her own at some point within the next six months or so?

As you want to live in  your father's old house, had you considered selling your own home now and buying  his house from the estate?

This would enable to you pay your stepmother that part of her  bequest that cannot be met from the cash in the estate and pay your siblings their inheritance.

I don't think she has made her mind up on how long to stay there. She's not really keen to talk about it yet. I would guess she'd like another 6-9 months at least but could go into next year. Whether the mortgage company would allow that timeframe without us selling the property is an issue.
Also getting my own property ready to be sold would have to commence soon, I don't particularly want to force the situation where she needs to move too soon.
After a stressful year for everyone involved, my thinking was to give her the option of 12-15 months from now otherwise likelihood it would be sold this summer.

elsien

Also to add, I'm not 100% sure but @greatcrested will probably know, if the wife stays in the property and is paying council tax, etc. that may well make her a tenant and you a landlord anyway even if she's not paying rent. It may be something you want to check. In the ideal world, everyone is in agreement, knows where they and everything goes as planned. However this forum is full of threads where family members haven't behaved particularly well so it's about covering all of you if you need to.