When you inherit a property with a mortgage it can be a bit of a mixed bag, on the one hand it can be a massive boost to your finances when it eventually sells, on the other hand it can be a burden, especially if it’s a childhood home you want to keep and can’t really afford.
The debts of the deceased still need to be paid and there are a variety of ways this can be handled.
You Pay The Remaining Mortgage
This really comes down to if you can afford it, if you want to keep the property and if the lender agrees you can take over the mortgage. If the property is going to be easy to let and you’re OK with the financial responsibility this could could be a good option for a lot of people, particularly if there is some sentimental attachment to the property, but the new owner does not wish to live in it. Remember however, rental profit has to be declared for tax purposes.
What if you inherit a property and can’t pay the mortgage?
There are two ways in which this can proceed, a) the estate covers the mortgage, this will happen if there is enough money in the estate and it is instructed that this should be done in the will. Or b) the property is sold to cover the remainder of the mortgage and you receive the remaining cash.
What if you inherit a property with a joint mortgage?
Well this is where things can get more complicated :
– If the property was owned under a joint tenancy then the other part on the mortgage the other party will inherit the entire house, this means any debts as well.
- If there is a tenancy in common agreement, then the property held by the deceased will pass to the person they named. But, it could also go elsewhere to pay debts.
- If there is no will then the beneficiary will be decided by a legal process.
This can be a very stressful time for all those involved and most lenders are sympathetic to that, and if you’re looking to get rid of the property as soon as possible we’re happy to help with this process and discuss your options with you at zoom property buyers.