Inheriting Properties with Buy to Let Mortgages
My father recently passed away leaving 11 properties, all with mortgages with an average of around 85% remaining to pay. My siblings and I have little to no knowledge of this area.
A couple of the properties mortgages are up in 2016, which at that time, as understand it, will need to either be paid off or transferred into new ownership and new mortgages issued. The solicitor believes that the mortgages are likely to now be frozen for 6 months after which time you have around 2 years before the mortgage companies like to see the properties transferred into the beneficiaries names, new mortgages issued or sold and mortgages repaid. We are currently deciding whether we would like to keep them and earn an income from them or whether they should be sold. We’re all leaning towards keeping them, is there a chance we might be forced to sell by the mortgage company? Do you have any information you could provide on how this process works?
The lender obviously has the option to allow the beneficiaries to take on the loan, but how does this normally work – would they have to apply as you do normally for a mortgage? Is there a better way to do it? I presume the income from the individuals and the income from the properties would be taken into consideration, would it be better if there are more people jointly applying, or in this incidence does it not matter? There’s also the decision about whether we keep them jointly (possibley in a LTD company) or split them up between ourselves
Anyway, a lot of questions that we do not have the answers to at the moment.
If you have any experience in this area and are able to shed any light it would greatly appreciated.
Many thanks
David Pearson
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6 months rent paid in advance refund
Member Since January 2011 - Comments: 12211 - Articles: 1406
10:15 AM, 26th March 2015, About 11 years ago
Reply to the comment left by “David Pearson” at “26/03/2015 – 09:54“:
Yes, definitely wait!
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Member Since July 2013 - Comments: 122 - Articles: 1
5:45 PM, 26th March 2015, About 11 years ago
In my experience saying you are self-employed is the kiss of death for your chances of getting a mortgage. Don’t even mention that you are thinking about it, and make sure you have squeaky-clean credit records. BTL loans don’t however appear to go into the ludicrous amount of detail required by owner-occupier residential lenders post-MMR, asking how much a month you spend on toilet paper etc: lenders are generally simply interested in the size of your deposit and a realistic assessment of achievable rent levels. Interest rates will be higher, though the mortgage arm of the RLA is currently advertising a two-year loan at 2.59% (BBR + 2.09%) at up to 70% LTV, which sounds pretty good to me.
Member Since July 2013 - Comments: 1266 - Articles: 1
12:36 PM, 28th March 2015, About 11 years ago
Reply to the comment left by “Tony Atkins” at “24/03/2015 – 10:46“:
Inheritance tax can be paid in up to 10 annual instalments if it relates to property that you decide not to sell. Interest is payable on the balance however.
Member Since March 2015 - Comments: 4
9:29 PM, 30th March 2015, About 11 years ago
Hi David, Very sorry to hear about your father and wondering whether I knew him? Was he treasurer for a landlord and tenants association in Manchester and came from the North East himself? If so would be good to touch base. Kind regards
Member Since March 2015 - Comments: 4
11:10 PM, 30th March 2015, About 11 years ago
Reply to the comment left by “Mrs Property” at “30/03/2015 – 21:29“:
Hi, I think that must have been a different guy.
Member Since March 2015 - Comments: 4
12:42 PM, 31st March 2015, About 11 years ago
Reply to the comment left by “David Pearson” at “30/03/2015 – 23:10“:
Thanks for responding, it’s good to know it was n’t Dave who was a similar age, but still sad for you and your family. Sincerest condolences.
Member Since July 2013 - Comments: 1434
12:49 PM, 1st April 2015, About 11 years ago
Reply to the comment left by “Mark Alexander” at “24/03/2015 – 13:34“:
That is an interesting take on valuations.
When my father-in-law died, the advice I was given was ‘get as high a valuation as you can , provided it does not take you over the IHT threshold”.
The reason being that it minimises capital gain (or gives a capital loss) when you sell the property.
Member Since January 2011 - Comments: 12211 - Articles: 1406
12:53 PM, 1st April 2015, About 11 years ago
Reply to the comment left by “Michael Barnes” at “01/04/2015 – 12:49“:
If Mother-In-Law was still alive that would have been good advice, especially if she was the sole beneficiary of Father-In-Law.
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Member Since July 2013 - Comments: 1434
2:10 PM, 1st April 2015, About 11 years ago
Reply to the comment left by “Mark Alexander” at “01/04/2015 – 12:53“:
My wife inherited the bulk of the estate, and we now let the property.
Member Since January 2011 - Comments: 12211 - Articles: 1406
7:31 PM, 1st April 2015, About 11 years ago
Reply to the comment left by “Michael Barnes” at “01/04/2015 – 14:10“:
Hi Michael
Was the net value of the estate below the IHT threshold? If so, then the advice you were given makes sense, if not it doesn’t!
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