This calculator is an estimation of how much you could borrow. If you’re ready to take out a mortgage, speak to a Revolution brokers to see what options are available.
Probate is the legal process of certifying a will, and you may have inherited a property that is going through the probate process.
Reasons for remortgage a property in probate include:
There are always multiple options for managing a probate property - and if you have a cash inheritance as well as the home, you can use those funds to repay an existing mortgage, as an investment, or as a deposit towards a new, more competitive mortgage.
Probate can take around six months, so the process can require patience.
Business finance broker regularly works with clients who have inherited property, and there are other important factors to consider:
Inheritance tax can delay the remortgaging process, and the executors of the will can often delay proceedings while they work through the legal system.
Examples include:
It is not unusual for an inherited property to be left empty while these tasks take place, and so vacant property insurance can be a wise precaution.
Inheritance tax is, currently, charged at 40% on estates inherited worth more than £325,000, or more than £650,000 in some scenarios. Given this high tax rate, it is often sensible to have a mortgage on the property from a tax-efficiency perspective.
As an illustration:
Parents cannot gift their children property to avoid inheritance tax, and you cannot buy it from them either, as the same threshold applies to properties even if your parents remain alive and well.
Probate values a property based on open market value and doesn't consider the appeal of the area, or a premium that might be payable on that particular property.
As a buyer, you can purchase a home through probate at a very low price, which is often a preferred option for beneficiaries who want to turn their inheritance into cash.
Estate agents manage most probate properties, although sellers can negotiate this as a private transaction. There is, however, a longer completion process, which means a mortgage on a property bought from probate might need to run for a slightly more extended period, or you may need a longer mortgage offer period to give you enough time.
Beneficiaries may sell a probate property for any number of reasons - they might not wish to keep the family home, cannot afford the mortgage, or want to realise cash against their inheritance.
There is also an option called an 'emergency grant of probate' whereby sellers are allowed to list a property for sale after around two weeks.
Interest on a mortgage is still payable throughout probate. However, most lenders will not expect repayments, or charge a penalty, as long as they know what is happening.
Sometimes, executors keep the payments up to date themselves by releasing funds from the estate.
Note that if you inherit a rental property, and tenants are in place, the rental income must pass to the executors until probate is complete.
You can, although you are strongly advised to work with an expert broker or advisor to guide you through the process.
Options include:
The affordability criteria are the same on taking over an inherited mortgage as they are on taking out a new remortgage. That means that you need to prove affordability at 'stress test rate' interest levels.
As an example:
Some exceptions do apply, for example, a mortgage with at least a five year fixed rate can be stress-tested at the discretion of the lender.
Affordability checks include:
Mainstream lenders often struggle to accept applicants with recent bad credit issues. Still, it is always worth consulting an experienced broker, who works with specialist lenders who can offer adverse credit mortgages.
This process is possible but complicated, so expert advice is essential.
You need to meet affordability criteria, with a minimum rental income, before a lender offers you a buy to let remortgage on a probate property.
Calculations work like this:
Unencumbered properties have no mortgage or borrowing secured against them.
If you inherit a home without a mortgage, you might decide to:
Most lenders will need you to have owned the property for at least six months to offer to lend. However, you can find a mortgage much sooner by working with a specialist broker who can recommend mortgage providers who offer Day One Remortgages or similar products.
Complications arise where a will has multiple beneficiaries, and therefore you each own a share of the same property.
You can remortgage to buy out other shares, or make a joint decision about whether to sell, keep, or rent out the home.
Joint mortgages are also an option, in which case a broker is vital, as this complicated scenario requires expert support to ensure you find the right lender who can offer a mortgage to multiple homeowners.
In any of these circumstances, give the Revolution Brokers team a call for more information about the remortgage and mortgage options on inherited properties, at any stage of the process. Ring the team on 0330 304 3040 or send us a message to info@revolutionbrokers.co.uk.
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The content included in our articles, blogs, web pages and news publications is based on information accurate at the time of writing. Note that policies and criteria can change regularly throughout the UK mortgage lending market, and it remains essential to contact the consultation team to receive up to date guidance. The information included on the Revolution Brokers site is not bespoke to any circumstances or individual application scenarios and therefore is not intended to be used as financial advice. The content we share is designed to be informative and helpful but cannot be relied upon to provide individual advice relevant to your mortgage requirements. All Revolution team members are fully qualified, trained and experienced to provide mortgage advice of an independent nature. We collaborate with lenders and providers who are regulated, authorised and registered with the Financial Conduct Authority (FCA). Should you require specific mortgage borrowing types, some products such as buy to let mortgages may not be FCA regulated. The Revolution team can provide further information about regulated and unregulated lending as required. Please remember that a mortgage is a debt which is secured against your home or property. Your home can be at risk of repossession if you do not keep up with the repayments or encounter any other difficulties in managing your mortgage borrowing responsibly. This also applies to any remortgage or home loan secured against your property, including equity release products.
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