Yes, you can absolutely get a mortgage on an inherited house in the UK, though the process involves several considerations including whether the property already has an existing mortgage, your financial circumstances, and the completion of probate before any lending can take place.
Recent research reveals fascinating insights about property inheritance in Britain – with 43% of Brits counting on inheriting property to secure their financial future, whilst only 4% of adults received an inheritance worth £1,000 or more in the past two years, with a median inheritance value of £11,000. Meanwhile, households in London and South Eastern England are expected to pass down a staggering £1.77 trillion in inheritance, with an average inheritance pot of £318,000.
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Can You Get a Mortgage On An Inherited House?
When you inherit a house, you’ll find yourself in one of three main situations that determine your mortgage approach.
Mortgage-Free Inherited Property
If you’ve inherited a property without any outstanding mortgage, you’re in the strongest position. You can choose to keep the property as-is, remortgage to release equity for other purposes, or sell the property outright. Many homeowners opt to take out a mortgage against their inherited property to fund home improvements, pay off existing debts, or invest in additional properties.
Inherited Property With Existing Mortgage
When you inherit a property with an outstanding mortgage, you automatically become responsible for the mortgage payments, even if you don’t live at the property. You should contact the mortgage lender immediately to inform them of the previous owner’s death, as they may offer a grace period for mortgage repayments. Your options include continuing with the existing mortgage terms, remortgaging the property in your name, or selling the property to clear the debt.
Buying Out Other Beneficiaries
If you’ve inherited a property alongside other family members, you might need to secure a mortgage to buy out their shares. This requires careful financial planning and often involves getting the property valued and arranging finance to pay the other beneficiaries their agreed-upon portion.
What Types of Mortgages Are Available for Inherited Properties?
The mortgage market offers several products specifically designed for inherited properties, each with different criteria and benefits.
Residential Mortgages for Inherited Property
You can apply for a standard residential mortgage if you plan to live in the inherited property. However, you’ll need to meet the lender’s affordability criteria, which can be challenging if you already have a mortgage on another property. Most lenders require you to have owned the property for at least six months before releasing capital, though some specialist lenders waive this requirement.
Buy-to-Let Mortgages on Inherited Property
If you plan to rent out your inherited property, a buy-to-let mortgage might be more suitable. BM Solutions, the specialist buy-to-let lender, is the largest lender providing mortgages against inherited properties without the typical six-month ownership requirement. They can lend up to 75% loan-to-value for most purposes, though you must own another UK property to qualify.
For buy-to-let mortgages, the estimated rental income needs to cover the mortgage by 125%. So if your mortgage payment is £1,000 monthly, you’d need rental income of at least £1,250 per month. Remember to declare any rental profits for tax purposes, as you’ll pay income tax on profits over £1,000.
Home Equity Loans on Inherited Property
You can also consider a home equity loan on inherited property for purposes such as buying out siblings, paying off a small mortgage balance, or updating the property. The process involves getting the property appraised, checking your credit score, and shopping around for the best lender terms.
Do You Lose First-Time Buyer Status When You Inherit Property?
Unfortunately, inheriting a house means you lose your first-time buyer status, even if you’ve never purchased a property before. As one Reddit user discovered, “as soon as you have a legal interest in the property – even if you’re lined up to inherit it but haven’t gotten paperwork yet, you lose your first-time buyer status”. This means you won’t qualify for first-time buyer mortgage deals or stamp duty relief.
However, if the executor sells the property as part of the estate and gives you cash instead of the property itself, you wouldn’t become a homeowner and could potentially retain your first-time buyer status.
Essential Requirements for Getting a Mortgage on Inherited Property
Before applying for any mortgage on inherited property, you must ensure several key requirements are met.
Probate Must Be Complete
You cannot take any formal mortgage actions until probate is complete. This legal process typically takes around six months, though it can be longer if there are complications. The grant of probate is usually issued within 4 to 8 weeks once the application is submitted.
Property Transfer Requirements
All beneficiaries and owners must be included on the mortgage application unless one person intends to buy out the others. Some lenders accept up to four applicants on a single mortgage application. The property must also have a working kitchen and bathroom if you’re applying for a buy-to-let mortgage.
Financial Affordability
Lenders will assess your income, credit history, and existing financial commitments. If you already have a mortgage, passing affordability tests for a second property can be challenging. Speaking with a mortgage broker experienced in inherited properties can significantly improve your chances of approval.
How Long Does the Mortgage Process Take for Inherited Property?
The mortgage approval process for inherited property follows similar timelines to standard mortgages, typically taking two to six weeks once all documentation is submitted. However, the overall process is longer due to the probate requirements, which must be completed first.
Working with a mortgage broker can sometimes speed up the approval process, as they’ll assess the entire market to find the best deal for your specific circumstances. Most mortgage offers remain valid for six months from the date of issue, giving you time to complete the legal transfer of the property.
Case Study: Elena from Manchester’s Inherited Property Dilemma
Elena from Manchester recently inherited her grandmother’s three-bedroom terraced house, which came with a remaining mortgage of £45,000. The property was valued at £180,000, leaving substantial equity. Sarah was torn between keeping the property as a rental investment or selling it to help fund her own house purchase.
After exploring her options, Elena discovered she could remortgage the inherited property for buy-to-let purposes, generating rental income of £850 monthly while covering a mortgage payment of £680. However, she was concerned about becoming a landlord and the responsibilities involved.
If you’re facing a similar situation and need certainty about your next steps, Property Saviour offers a guaranteed sale service that removes the stress and uncertainty from your decision. We understand that inheriting property can be overwhelming, especially when you’re grieving, and we’re here to provide compassionate support and practical solutions.
Reddit Insights: Real Experiences from Property Inheritors
Reddit discussions reveal valuable insights from people who’ve actually inherited property. One user shared their experience of inheriting a £550,000 property with rental potential of £2,000-£2,500 monthly, whilst having a £330,000 mortgaged property with £700 monthly payments. They were weighing whether to sell the inherited property to pay off their mortgage or keep it for rental income.
Another Reddit user highlighted the complexity of selling inherited property, particularly when Land Registry delays affect the sale process. Their probate solicitor recommended cancelling the title transfer and managing the sale directly to avoid complications between conveyancing and probate solicitors.
These real-world experiences highlight the importance of getting professional advice early in the process to avoid costly delays and complications.
Mortgage Options Comparison for Inherited Property
The comparison above shows that each mortgage type serves different purposes and circumstances. Your choice depends on whether you plan to live in the property, rent it out, or simply access the equity for other purposes:
| Mortgage Type | Key Features | Pros | Cons |
|---|---|---|---|
| Residential Mortgage | For living in the property | Lower interest rates, longer terms available | Must pass affordability tests, may struggle if you have existing mortgage |
| Buy-to-Let Mortgage | For rental purposes | Rental income helps cover payments, potential capital growth | Higher deposit required (typically 25%), higher interest rates, landlord responsibilities |
| Home Equity Loan | Lump sum against property value | Keep existing arrangements, access cash quickly | Higher interest rates than mortgages, secured against property |
| Remortgage | Replacing existing mortgage | Potentially better rates, release equity | Must qualify as new applicant, legal and valuation costs |
What Happens If Multiple People Inherit the Same Property?
Joint inheritance creates additional complexity in the mortgage process. You’ll typically own the property as either joint tenants (equal shares) or tenants in common (potentially unequal shares).
If you want to buy out other beneficiaries, you’ll need to have the property valued and secure sufficient finance to pay them their agreed share. A solicitor will formalise your intention with a letter of intent, and you’ll need at least a 5% deposit for the mortgage application.
Sometimes selling the property and splitting the proceeds is the simplest option, especially when beneficiaries have different financial goals or can’t agree on the property’s future.
Can You Get a Buy-to-Let Mortgage Immediately on Inherited Property?
Most lenders require you to own a property for six to twelve months before releasing capital. However, specialist lenders like BM Solutions waive this requirement for inherited properties, allowing you to secure buy-to-let finance immediately after probate completion.
Kensington for Intermediaries requires probate to be finalised and all beneficiaries to be shown as property owners at Land Registry for at least six months. NatWest for Intermediaries offers more flexibility, accepting applications where the property hasn’t yet been transferred into the beneficiary’s name.
What Are the Tax Implications of Mortgaging Inherited Property?
Inheritance tax may apply if the total estate exceeds £325,000, with a 40% rate on amounts above this threshold. However, there’s an additional £175,000 allowance for main residences passed to direct descendants, potentially creating a £500,000 tax-free threshold.
If you rent out the inherited property, you’ll pay income tax on rental profits above £1,000 annually. Capital gains tax may also apply when you eventually sell the property, calculated from its value when you inherited it rather than the original purchase price.
Should You Sell Your Inherited Property Instead of Getting a Mortgage?
Sometimes selling makes more financial sense than keeping an inherited property. If you’re struggling with mortgage affordability, don’t want landlord responsibilities, or need immediate cash for other purposes, selling might be your best option.
Property Saviour specialises in helping people who need to sell inherited property quickly and with certainty. We understand that every situation is unique, and we offer a guaranteed sale service that removes the uncertainty and stress from your decision. Whether you’re dealing with probate delays, multiple beneficiaries, or simply want a quick, hassle-free sale, we’re here to help with empathy and understanding during what can be a difficult time.
How Long Do You Have to Keep an Inherited House Before Selling?
There’s no legal requirement to keep an inherited house for any specific period before selling. However, some mortgage lenders impose waiting periods of six to twelve months before allowing capital release. From a tax perspective, selling immediately after inheritance typically doesn’t trigger capital gains tax, as the property’s value is reset to its market value at the time of inheritance.
Can You Remortgage an Inherited Property Without Probate?
No, you cannot remortgage an inherited property without completing probate first. No lender will consider applications until probate is granted and you become the legal owner. This process typically takes four to eight weeks for the grant to be issued, though the overall probate process can take several months.
What Credit Score Do You Need for a Mortgage on Inherited Property?
Credit score requirements for inherited property mortgages are similar to standard mortgages, typically requiring a minimum score of 580-620 for most lenders. However, your existing financial commitments, including any current mortgage, will significantly impact your affordability assessment. The better your credit rating, the better interest rates you’ll access.
Can You Get 100% Mortgage on Inherited Property?
Most lenders require a deposit even for inherited property mortgages. Buy-to-let lenders typically require 25% deposit, whilst residential mortgages might accept 5-10% deposit. However, if you’re using the inherited property’s existing equity, this can count as your deposit, potentially allowing higher loan-to-value ratios.
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.
Sell with certainty & speed
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.
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- 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.
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- Our approach is transparent and ethical, which is why sellers trust us.
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- 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.
