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Inherited House - advice needed please!

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  • Inherited House - advice needed please!

    Hi there, am new to this forum and the world of mortgages, etc., hoping someone can offer me some sound basic advice!

    My brother and I inherited the family house after our mum sadly passed in 2008. The house is in both our names, equally at 50%. We've invested a lot into the house over the last couple of years, and recently had the property valued at £300,000 (West London/Middlesex area).

    But now it's not really convenient for us to be sharing under one roof with our girlfriends, but my brother is unwilling to sell/move, so the next logical step surely is to buy a second property for the other to move into. We haven't got enough savings (10k) for a decent enough deposit, so we have been thinking whether it's possible to release equity from the house (remortgage?) - or to take out a secured loan of some kind to give us the required cash for a bigger deposit??

    Not sure whether a bank or a broker is the wiser move to find the best deal? I saw the bank manager of my local LloydsTSB last year and my brother and I have very good credit ratings and would be able to gain a mortgage of up to £240,000 (in principle) as long as we had a 10% deposit (although their interest rate wasn't that appealing because of us not having a large desposit).

    This is all new to me so would definitely appreciate some solid, free financial advice before jumping in blindfolded with the bank!!

    Many thanks in advance

    Paul
    Last edited by PaulyUK; 20-02-2012, 11:24 AM.

  • #2
    Re: Inherited House - advice needed please!

    Hi Paul,

    Releasing equity from a house can be very powerful. This can be done and is done by many investors.

    The cons:
    Your interest/repayments will be higher on the original house
    If you sell the house, you will have to factor in capital gains tax with a property with less equity.

    The pros:
    Generally cheap rate of interest.
    If used correctly can be great to getting a deposit together.

    But do make sure you can afford the repayments of both mortgages!

    Hope I was helpful,
    Kind Regards,
    Randeep
    Randeep Mann

    Want to Rent or Sell quickly? I can help.
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    • #3
      Re: Inherited House - advice needed please!

      On the other hand, couldn't your brother (who is unwilling to sell or move, so presumably the second property would be for you) simply buy out your interest in the house by remortgaging for £150k - half the current value - and giving this to you to use towards your own property? I am assuming, of course, that there is currently no mortgage on the family home but a mortgage broker and a solicitor should be able to help you out with this.

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      • #4
        Re: Inherited House - advice needed please!

        Hi Jeannie,

        Would the Brother be happy to release half (£150k) then pay interest on that?

        Over time the brother would have to pay £300k over 25 years to repay that remortgage.

        Kind Regards,
        Randeep
        Randeep Mann

        Want to Rent or Sell quickly? I can help.
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        • #5
          Re: Inherited House - advice needed please!

          Perhaps I didn't explain clearly, Randeep. What I meant is that the brother might wish to buy out PaulyUK's half of the house, thus making the brother the sole owner of the property. PaulyUK would then be free to take his inheritance as cash, giving him a sizeable deposit to put towards his own property. Of course, this may not be possible or even desirable from either one's point of view but it is a relatively simple option.

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