Inherited Property Problems

[partisan]

Our mother died recently and left a property worth �300K to her four children (all adults).The house has no outstanding mortgage. As we are weighing up our options perhaps somebody has gone through a similar experience and can offer some real advice.

We would like to keep the property, as it has increased in value and is likely to continue to do so (West London) and rent it out as demand here is far greater than supply.Simple so far you say but here's the tricky bit. We'd all like a cash sum to help us out with our current finances. We'd be looking at 25k each. (100k total). Is there a way that we can free up this cash, keep the house, rent the property and have the loan/mortgage paid from this rent. (Rent would be double Mortgage repayment)

Any advice would be most welcome.

Thank you

[lady_p_gold]

I suppose you could remortgage the house, but to be honest I think that if there are four of you all involved its going to be quite tricky as the mortgage would have to be in all four names. Also, have you thought about what happens if one of you dies. Their share would either go to you, or if they have made a Will they could leave it to their wife or husband or whoever they wished. Everything might be fine, but these things are notorious for causing problems when the extended family get involved. Best thing would be for you all to go along to an independent mortgage advisor.

[Oneeyedvic]

I would set up a limited company with all 4 beneficiaries as Directors and equal shareholders. Open up a bank account and apply for the mortgage in the name of the limited company.

Make sure you all sit down and think about this through. What happens if someone wants to sell off their share? What about if one person needs some money in an emmergency? How will repairs be paid for? Think about every posibility and consult a solicitor to get the agreement drawn up (between the four of you). Whilst you may all agree at the moment, who knows what will happen in 2 years time.

[vicars]

Hi partisan, the answer is very simple. Mortgage lenders have no problem with 4 borrowers. You would all be named on the mortgage and deeds. You then choose a buy to let lender to take a mortgage with and the money would be split equally between you. They have no issues with what the money is being used for so long as it has a legal purpose. So far as accounts go you will need to complete a self assessment return to pay any tax due on rental profits. If you are raising the money for personal use you can not offset the mortgage interest against the rental income. If you raise the money for investment purposes (deposit on new buy to let) then the money can be offset against the overall rental income (but only for the person/people who do this). You do not need to complicate things with a limited company as your choice of lenders will be greatly reduced potentially and self assessment is simpler as is providing for when one of you dies. To cover this you can all share the house equally so that the persons share is passed to the others or you all own 25% each and the share is passed to the deceased's estate.

You can start the mortgage process once your names have been registered with the land registry so make sure you tell the solicitor you need to take a mortgage out asap. I would love to sell my wares as a buy to let broker, but if I did that would be a bit naughty! If you want some further ideas on buy to let mortgages just post a reply and I can give some tips.

Best of luck.