Inheriting a house can be a life-changing event, but it often comes with questions about mortgages and financial responsibilities. If you’re wondering “Can you get a mortgage on an inherited house?” the answer is yes, but there are several factors to consider.
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Can You Get a Mortgage On An Inherited House?
When you inherit a house, you might find yourself in one of these situations:
- The property is mortgage-free
- There’s an existing mortgage
- You want to buy out other beneficiaries
In each case, you have options for getting a mortgage on the inherited property.
Mortgage-free inheritance
If youve inherited a property without a mortgage, you’re in a good position. You can choose to:
- Keep the property as-is
- Sell it outright
- Take out a mortgage to release equity
Many people opt for the second option, selling the inherited property. This can provide funds for renovations for your own home, pay off mortgage, investments, or other financial goals.
Inheriting a property with an existing mortgage
When you inherit a property with an outstanding mortgage, you become responsible for the payments. You have a few options:
- Continue paying the existing mortgage
- Remortgage the property in your name
- Sell the property to clear the debt
It’s worth noting that some mortgage lenders offer a ‘grace period’ after the original owner’s death, during which they won’t expect payments. This gives you time to sort out the estate and decide what to do next.
Buying out other beneficiaries
If you’ve inherited a property along with others, you might want to buy them out. In this case, you’ll need to:
- Get the property valued
- Agree on a fair price with the other beneficiaries
- Apply for a mortgage to cover their shares
Can you remortgage a house you inherited?
Yes, you can remortgage a house you’ve inherited. This might be necessary if you want to buy out other beneficiaries or if you need to take over an existing mortgage. The process is similar to remortgaging any other property.
How long after inheriting a house can you get a mortgage?
You can apply for a mortgage on an inherited property once probate is complete and the property is officially in your name. This process typically takes 6-12 months, but can vary depending on the complexity of the estate.
Can You Get a Mortgage on an Inherited House?
When you inherit a house, you also inherit any mortgage debt attached to it. This means that you’ll be responsible for making the mortgage repayments, unless the deceased had a life insurance policy that covers the outstanding balance. It’s essential to review the mortgage terms and conditions to understand your obligations and options.
Do you need a deposit for a mortgage on an inherited property?
If the inherited property has enough equity, you might not need a deposit. However, having a deposit can help you secure better mortgage rates. The amount of deposit required will depend on the lender and your financial circumstances.
Can you get a buy-to-let mortgage on an inherited property?
Yes, if you plan to rent out the inherited property, you can apply for a buy-to-let mortgage. These typically require a larger deposit and have different criteria compared to residential mortgages.
Options for Dealing with an Inherited Mortgage
There are several options available when dealing with an inherited mortgage:
- Sell the property: You can sell the property to repay the mortgage and any other debts attached to it. This option can be time-consuming and may not be suitable if you want to keep the property.
- Refinance the mortgage: You can refinance the mortgage in your name, which can help you secure a better interest rate and repayment terms. However, you’ll need to meet the lender’s eligibility criteria and may need to provide a deposit.
- Buy-to-Let Mortgages: If you plan to rent out the inherited property, a buy-to-let mortgage could be the right choice. These mortgages are designed for landlords and allow you to borrow money to purchase or refinance a rental property.
- Owner-Occupier Mortgages: If you intend to live in the inherited house, you can apply for an owner-occupier mortgage. Your lender will assess your affordability based on your income, debt levels, and credit history.
- Government Schemes: There are also government schemes like the Lifetime ISA, which can help first-time buyers purchase a home. However, these schemes may not be directly applicable to inherited properties unless you are a first-time buyer using the inherited property as your primary residence.
Do I Pay Stamp Duty on an Inherited House?
In most cases, you won’t need to pay stamp duty on an inherited house, as it’s not considered a purchase. However, if you decide to sell the property or refinance the mortgage, you may need to pay stamp duty on the new mortgage or sale.
Getting a Mortgage on an Inherited House
The process of getting a mortgage on an inherited property is similar to getting a mortgage on any other property. Lenders will assess your income, outgoings, credit history, and the value of the property.
However, there are a few extra steps:
- Wait for probate to complete
- Get the property valued
- Decide what type of mortgage you need (residential, buy-to-let, etc.)
- Gather all necessary documents
Tip: Some lenders specialise in mortgages for inherited properties. It’s worth speaking to a mortgage broker who can help you find the best deal.
To get a mortgage on an inherited house, you’ll need to meet the lender’s eligibility criteria, which typically includes:
- Income and affordability: You’ll need to demonstrate that you can afford the mortgage repayments, taking into account your income, expenses, and credit history.
- Credit history: You’ll need to have a good credit history to secure a mortgage.
- Loan-to-value ratio: The lender will assess the loan-to-value ratio, which is the percentage of the property’s value that you’re borrowing.
- Age and employment status: Your age and employment status may also be considered by the lender.
It’s worth noting that if you inherit a house with an existing mortgage, you’ll need to continue making payments to avoid repossession.
Insider’s Tips
- Consider using a mortgage broker who understands inherited property cases
- Check your credit score and improve it if needed
- Check the Mortgage Terms: Review the terms of the existing mortgage to understand any obligations or restrictions.
- Consider Legal Advice: Consulting a solicitor can provide clarity on the legal aspects of inheriting a property with a mortgage.
- Mortgage Affordability: Lenders will assess your ability to afford the mortgage based on your income, debt-to-income ratio, age, and credit history.
- Gather all necessary documents, including proof of inheritance
- Probate Process: Before applying for a mortgage, ensure that probate has been completed and the property has been transferred to your name.
- Existing Mortgage: If there is an existing mortgage, you may need to take over the payments or refinance the property in your name.
Can I Get a Mortgage on an Inherited House with No Income?
To get a mortgage on an inherited house, you typically need to demonstrate a stable income to prove affordability. However, some lenders may consider alternative income sources or offer products tailored to specific situations
Tax obligation
Remember that inheriting a property can have tax implications. You might need to pay:
- Inheritance Tax on the estate
- Capital Gains Tax if you sell the property
- Income Tax if you rent out the property
It’s always wise to seek professional tax advice to understand your obligations.
What if the inherited property needs work?
If the inherited property needs renovation, you might be able to get a mortgage that includes funds for improvements. These are sometimes called ‘renovation mortgages’ or ‘home improvement loans’.
Tip: Keep all receipts for work done on the property. This can help reduce your Capital Gains Tax bill if you decide to sell in the future.
Can I get a mortgage on an inherited house with bad credit?
Yes, it’s possible to get a mortgage on an inherited house with bad credit, but you will need to seek advice from a mortgage broker.
Do I need to pay inheritance tax on an inherited house?
Inheritance tax is only due on the net value of the estate, which means that any mortgage debt will reduce the overall net value. However, you may need to pay inheritance tax on the property if it’s worth more than the nil rate threshold.
Can I sell an inherited house with a mortgage?
Yes, you can sell an inherited house with a mortgage, but you’ll need to use the sale proceeds to repay the mortgage and any other debts attached to the property.
How Does Inheritance Tax Affect My Mortgage Application?
Inheritance tax is calculated on the net value of the estate, excluding any outstanding mortgage. This means the mortgage debt is deducted from the property’s value before calculating the tax.
How long do I have to wait before getting a mortgage on an inherited house?
You’ll need to wait until probate is complete and the property is officially in your name. This can take several months.
Can I get a buy-to-let mortgage on an inherited property?
Yes, if you plan to rent out the property, you can apply for a buy-to-let mortgage. These often have different criteria than residential mortgages.
Will I need to pay stamp duty on an inherited property?
You don’t pay stamp duty on inherited property. However, if you buy out other beneficiaries, you might need to pay stamp duty on their share.
Can I Use a Government Scheme for an Inherited Property?
Government schemes like the Lifetime ISA are primarily designed for first-time buyers purchasing their primary residence.
If you are a first-time buyer and plan to live in the inherited property, you may be eligible for such schemes.
Table: Comparing Mortgage Options
| Mortgage Type | Description | Eligibility |
|---|---|---|
| Buy-to-Let | For rental properties | Landlords |
| Owner-Occupier | For primary residences | Homeowners |
| Lifetime ISA | For first-time buyers | First-time buyers |
Selling Your Inherited Property for Cash
Inheriting a property can be a double-edged sword. On one hand, it’s a valuable asset that can provide financial security. On the other hand, managing an inherited property can be a daunting task, especially if you’re not familiar with the responsibilities that come with it. If you’re considering selling your inherited property, Property Saviour offers a straightforward and hassle-free solution.
The Hidden Costs of Keeping an Inherited Property
- Tax on Rental Income: If you decide to rent out the property, you’ll need to pay tax on the rental income. This can significantly reduce your profit margins and add to your administrative burden.
- Maintenance and Repairs: Inherited properties often require immediate attention to maintenance and repairs, which can be costly and time-consuming.
- Compliance Duties: As a landlord, you’ll need to comply with various UK government regulations, including gas safety certificates, electrical safety checks, and energy performance certificates. Failure to comply can result in fines and penalties.
The Benefits of Selling to Property Saviour
- Quick Cash Sale: Property Saviour buys properties quickly, often within 10 days, providing you with a lump sum to use as you see fit.
- No Estate Agents: You won’t need to deal with estate agents or their fees, saving you time and money.
- No Surveys: Property Saviour doesn’t require surveys, which means you won’t need to worry about the condition of the property.
- Guaranteed Price: Once you agree on a price, Property Saviour will honour it, giving you peace of mind.
Why Choose Property Saviour?
- Real Cash Buyers: Property Saviour is a genuine cash buyer, not a middleman or a broker. This means you can trust that the sale will go through quickly and smoothly.
- Expertise: With years of experience in buying problematic properties, Property Saviour can handle even the most complex situations.
- Customer Reviews: Property Saviour’s reviews are from real sellers, giving you confidence in their professionalism and reliability.
Take the Hassle Out of Selling Your Inherited Property
Selling your inherited property to Property Saviour can be a liberating experience. You’ll avoid the stress and financial burdens associated with managing a rental property, and you’ll receive a quick and guaranteed cash payment. Contact Property Saviour today to discuss your options and take the first step towards a hassle-free sale.
Property Saviour Price Promise
- The price we’ll offer is the price that you will receive with no hidden deductions.
- Be careful with ‘cash buyers’ who require a valuation needed for a mortgage or bridging loan.
- These valuations or surveys result in delays and price reductions later on.
- We are cash buyers. There are no surveys.
- We always provide proof of funds with every formal offer issued.
We'll Pay £1,500 Towards Your Legal Fees
- No long exclusivity agreement to sign because we are the buyers.
- You are welcome to use your own solicitor.
- If you don’t have one, we can ask our solicitors for recommendations.
- We share our solicitor’s details and issue a Memorandum of Sale.
Sell With Certainty & Speed
- Our approach is transparent and ethical, which is why sellers trust us.
- 100% Discretion guaranteed.
- If you have another buyer, you can put us in a contracts race to see who completes first.
- Complete in 10 days or at a timescale that works for you. You are in control.
