Buying Out Sibling from Inherited House - Questions

Noneforit999

Hi

My wife and her sister have inherited 50% of their grandparents house each. Probate is currently going through at the moment so the house belongs to the 'estate' until presumably they change the ownership once probate comes through. 

House valued at £400k for probate.

My wife and I want to buy the house to live in so we would essentially buy her sister out.

The house is in need of some modernisation and we would need some cash to do this so my questions are:

1. Could we get a mortgage with 60% LTV so borrowing £240k with £160k being a our 'deposit'. Her sister would then get £200k and we would be left with £40k for renovations etc. Is this do able or would we need to use the whole 50% as the deposit and only buy out her sisters 50%?
2. Would we pay stamp duty on her sisters 50%? So £200k?

I am trying to get my head around how the deposit will work. Like we are buying the house for £400k but using her existing equity to pay the deposit but no money changes hands for this, I am not sure how it works on exchange if there is no actual money for a deposit? 

Thanks

canaldumidi

Who are the Executors?

Noneforit999 said:

Hi

My wife and her sister have inherited 50% of their grandparents house each. Probate is currently going through at the moment so the house belongs to the 'estate' until presumably they change the ownership once probate comes through.

Executors should transfer itinto your & your wife's names.
House valued at £400k for probate.

My wife and I want to buy the house to live in so we would essentially buy her sister out.

The house is in need of some modernisation and we would need some cash to do this so my questions are:

1. Could we get a mortgage with 60% LTV so borrowing £240k with £160k being a our 'deposit'. Yes. You would pay £200 toth Estate, and the Executors would then pay the £200 to the sister (in addition to any other inheritance she is due).

Her sister would then get £200k and we would be left with £40k for renovations etc. Correct.

Is this do able or would we need to use the whole 50% as the deposit and only buy out her sisters 50%? No.
2. Would we pay stamp duty on her sisters 50%? So £200k? Yes

I am trying to get my head around how the deposit will work. Like we are buying the house for £400k but using her existing equity to pay the deposit but no money changes hands for this, I am not sure how it works on exchange if there is no actual money for a deposit?

There may be no need for a contract as the Executors simply transfer the property to you., though the lender might insist on one. Not sure.

Ref the mortgage,go and speak to an independant mortgage broker.

Noneforit999

canaldumidi said:

Who are the Executors?

Noneforit999 said:

Hi

My wife and her sister have inherited 50% of their grandparents house each. Probate is currently going through at the moment so the house belongs to the 'estate' until presumably they change the ownership once probate comes through.

Executors should transfer itinto your & your wife's names.
House valued at £400k for probate.

My wife and I want to buy the house to live in so we would essentially buy her sister out.

The house is in need of some modernisation and we would need some cash to do this so my questions are:

1. Could we get a mortgage with 60% LTV so borrowing £240k with £160k being a our 'deposit'. Yes. You would pay £200 toth Estate, and the Executors would then pay the £200 to the sister (in addition to any other inheritance she is due).

Her sister would then get £200k and we would be left with £40k for renovations etc. Correct.

Is this do able or would we need to use the whole 50% as the deposit and only buy out her sisters 50%? No.
2. Would we pay stamp duty on her sisters 50%? So £200k? Yes

I am trying to get my head around how the deposit will work. Like we are buying the house for £400k but using her existing equity to pay the deposit but no money changes hands for this, I am not sure how it works on exchange if there is no actual money for a deposit?

There may be no need for a contract as the Executors simply transfer the property to you., though the lender might insist on one. Not sure.

Ref the mortgage,go and speak to an independant mortgage broker.

Their Dad is the executor and a beneficiary of the part of the estate that is not the house, i.e. everything else so money etc. 

Sounds like what we want to do is possible then.

Just wanted to confirm we could borrow additional funds really, we didn't want to mortgage the 50% to buy her sister out and be stuck with 50% equity with no money for renovations etc.