Inheriting A House With A Mortgage: Your Complete Guide
Published by Property Saviour
The UK's No.1 Fast House Sale Company
October 3, 2018 - Read time: 3 minutes
Inheriting a house with a mortgage can be a huge strain on anyone. You’ve just had someone you love pass away and now you have the added stress of figuring out what to do with the property.
There will be loads of questions rushing through your mind such as “will I inherit mortgage debt?” and “should I sell the house?”.
There are plenty of options available, but you will need to pick the one that works the best for you.
The first thing you need to know is that the mortgage will still need to be paid off. There are plenty of different ways this can happen depending on a number of factors including your financial situation.
Take a read through the following guide on inheriting a house with a mortgage and figure out which option works best for you.
Option one: You can pay the mortgage
So, you’re thinking: “I inherited a house. Now what?”.
Well, your first option is to take on the mortgage payments yourself. If you have the cash spare you could pay it all off in one go.
It may also be that the recently deceased had life insurance, which could mean you receive a settlement. If this happens you could use that money to pay off some (or all) of the mortgage.
However, it is also possible for you to repay the mortgage monthly. You will first need to go through the normal checks from the lender to make sure you can afford it. Once that is done, and you are accepted, you can start to repay the debt.
Remember, if you do decide to pay for the mortgage, there is the possibility of renting it out to help with the repayments. In this circumstance, you will need to negotiate a buy-to-let mortgage with your lender.
Option two: The estate can pay the mortgage
Inheriting a house with a mortgage can be a burden, but the load can be made much lighter if the mortgage is paid off by the estate.
With this option, the recently deceased’s assets are sold off and the mortgage repayments are paid with the money collected. It’s a fantastic option to take if you can as you will not be lumbered with any debt when you receive the house.
However, there is a catch. It needs to be specifically stated in the will that the estate will be used to pay off the mortgage. Without the go-ahead, you will need to choose one of the other options available to you.
Option three: You can sell the house
It may be that you do not want to keep the house — some people simply can’t afford to keep the house, while others see it as too much of a burden. Whatever you decide is up to you, but the mortgage will still need to be paid off.
If you decide you do not want the house, you can sell it and use the money to cover the remaining mortgage payments.
Selling the house quickly for cash could be beneficial for you in this situation. If you can’t take on the financial burden of another house, selling the house quickly for cash reduces the number of hidden costs such as council tax bills, utilities and empty property insurance. Furthermore, empty properties can attract squatters or criminals looking for an easy target.
Property Saviour will guarantee to buy your empty probate property, no matter what state it has been left in. We promise a fair cash offer for a guaranteed quick sale and can give you a cash advance to help you clear outstanding bills before we complete.
The average completion time is just 19 days, plus you will get a daily or weekly update on your property sale. Furthermore, we will also pay for your legal fees in relation to your sale.
How much is inheritance tax in the UK?
If you do decide to sell your inherited property then you will probably be asking yourself: “How much is inheritance tax in the UK?”. The good news is that from April 2017, the inheritance tax allowance has risen from £325,000 to £500,000. That means as long as the entire estate is under £500,000 there will be few tax consequences. However, you should always speak to a qualified accountant who can give you advice based on your personal circumstances.
Inheriting A House With A Mortgage: What Next?
If you are inheriting a house that is paid off already then life is a bit easier, but if you are inheriting a house with a mortgage it becomes a bit more complicated.
You have a number of options to choose from and it may not be easy to pick which one is best for you, particularly after the death of a loved one.
During difficult times it can be best to speak to an expert. Call Property Saviour on 0113 320 6700 or email us at firstname.lastname@example.org and let us help you with your next move.