Potentially stupid question about home owning

[mortgagenovice]

Have name changed as this contains very personal info.
I inherited a house and it's about to sell. The money will be spilt between me and four other family members but it's a substantial amount. (I.e., my share would be enough to buy another much smaller and cheaper property).
I'm a low earner and wouldn't be able to get a mortgage at present. If the house sold and I walked away with a lump sum, is it as straightforward as I can buy my own property with it?
I can't really speak to family about this, it's a difficult situation. I'm very naive to how properly sales work having never bought a house before. I'm assuming there's no point in talking to a mortgage advisor for example for advice? Sorry if this seems daft, I'm very overwhelmed by it all. Hoping someone can give me an idea.

From what I can tell, yes it does make the process a lot simpler than if you were getting a mortgage. You would still need a solicitor though and to have all the normal checks they would do on the property etc. And could potentially still be stuck in a chain of buyers waiting to move in.

If you have the cash you can make an offer on a house your like and buy it. Mortgages are only if you need a loan to buy the house. Being a cash buyer might put you in stringer position because the sake can often be completed more quickly.
Don't forget to budget for solicitor fees.

*stronger.
Must learn to proof read!

Yes. If the house is worth say £300k and you inherit a third (ie. £100k) and that £100k is enough to buy a house outright, you being a low earner won’t be an issue - you’d be a cash buyer. Just remember there will be legal fees, survey costs etc so you’ll need enough money for the house in full plus those additional costs.

Yes, the process for buying a house would be the same (minus applying for a mortgage), you would just proceed as a cash buyer. Very appealing to a lot of sellers who don't want to be stuck in a chain! You'll need proof of where the money has come from which sounds like it won't be an issue.

Make sure you account for solicitor fees. But if you're a cash buyer you don't need a mortgage or a broker.

Can you identify an estate agent that sells a lot of the ftb type properties you will be interested in. As part of booking some viewings you may well get an agent who can help you understand the process.
You’ll still also need a solicitor to do the conveyancing for your purchase I.e. they will check there’s no legal concerns and do the work for the actual contract of sale. They’ll also help you understand what needs to happen when.

We accounted about 10% of the cost of the property for fees.
Solicitor fees, transfer fees, stamp duty , moving costs, insurance etc.
Good luck.

Thank you all so much, that's so reassuring. So when the house sells does the money just appear in my account? And then I use it to buy somewhere? I'm maybe expecting it to be more complicated than it is. Are solicitors fees a significant amount? Really grateful for all your help.

Yes, you can buy a house outright without a mortgage. You’d be considered a “cash” buyer ie: you have the money in the bank, not that you have a briefcase of bank notes! It’s a strong position to be in, as you will not dependent on mortgage approval or the sale of another house to raise your funds.

There are other costs to buying a house other than the value of the house though. As a buyer you’d need to pay solicitor’s fees, which will include conveyancing* and Land Registry, and stamp duty (land tax). Stamp duty thresholds are all over the place this year. Currently, you don’t pay on properties valued under £500,000, but this is reducing in stages to £125,000 in October.

You may also be able to buy a house with the inheritance and get a small mortgage, for example you inherit 100 k and you want a house that is 125 k, you may be able to get a mortgage for the the 25 k. I would ring a few solicitors too and get quotes for their services.

Just to give you an idea, I moved recently.
The solicitors and search/land registry etc fees were £1780 and the survey on the new house was £500. I'm in the north, not sure if it's more expensive elsewhere.

However my solicitor fees were for buying and selling so I'd expect yours to be a bit less as there is no selling involved.

Hopefully you'll be buying soon so will avoid stamp duty (that was a further almost £3k for me.)

You might need removals? Can't think of anything else you'd have to fork out for.

Good luck with your house search and I hope it all goes smoothly

Yes, if your share is enough to buy a property with then you can absolutely do that. A few things to bear in mind:

• You'll need to budget for conveyancing (solicitor's) fees. If you call some local solicitors they should be able to give you a quote based on the amount you roughly expect you'd be spending on a home.
• In some circumstances you may also have to pay stamp duty, although as a first time buyer, buying a cheaper property, this is less likely to apply.
• If you'll be looking at cheaper properties, it's good to get an idea of why they're cheap. For example, a flat over a shop may be cheap because it's harder to get a mortgage on this kind of property - this wouldn't matter to you as a cash buyer but would be something to bear in mind for when the time came to sell the property, because it might be hard to find a buyer. Ditto properties of 'unusual construction', like prefab postwar homes. Ditto properties with a history of structural issues. Basically, if something looks surprisingly cheap, there's probably a reason. It's good to understand what those reasons are and weigh up whether they're an issue to you.
• Or, if you look at homes that need refurbishment, obviously they're cheaper because they need a lot doing, but then you have to bear in mind the costs of doing the work.
• Think as well about keeping back a chunk of money as a contingency fund for any repairs that may be needed as time goes on. If you're on a low income I'm guessing it would be harder to get together eg a few thousand if the boiler packs in/roof develops issues.

You could consider speaking with a financial advisor, to get their take on what would be the most sensible way to use your inheritance - buying a property sounds like a great option for you and I hope you're able to find a home that suits you.

You already have a solicitor - for the house that is being sold. If you’re happy with them, I would ask their advice - they can quote for fees.

I'm so glad I asked, I was so nervous to post!! Thank you all so much, all this info is priceless to me. Will take everything on board.

Sorry for your difficult situation, OP.

You have some options.

As PP have said, yep, you can buy outright.

However, even though you are a low earner, the fact that you have such a significant down payment would probably enable you to be able to take out a mortgage on top, if you could afford to put your current rent into a mortgage for somewhere bigger. Because with a large amount of equity (the ‘paid for’ amount as opposed to the amount borrowed from the mortgage lender) the lenders see you as less of a risk.

So you could talk to a mortgage advisor, but be aware that in the end the choice is yours and not to get dazzled!

So, if the your inheritance could buy you a 1 bed flat, you might be able to get a small mortgage on top and buy a 2 bed.

Remember as an owner occupier you need to keep savings or budget for for a new boiler, roof repairs, etc. Saving what you currently pay in rent could go towards a house maintenance pot.

Rough Budget for buying;
Survey £600
Solicitors plus their costs (they will pay for searches etc): £2-3k
Stamp duty if your property is over £300k

As you are a first time buyer My advice would be use a proper solicitor not a cheap online ‘conveyancer’.

And keep asking questions on this board

So when the house sells does the money just appear in my account?
Pretty much. I remember refreshing, refreshing, refreshing the laptop screen when we sold our old hiuse/bought our house/current house. Momentarily, I had £180K in my account!!

@LouLou198

You may also be able to buy a house with the inheritance and get a small mortgage, for example you inherit 100 k and you want a house that is 125 k, you may be able to get a mortgage for the the 25 k. I would ring a few solicitors too and get quotes for their services.

Yes I was going to say the same . Can you get financial advice op ? , lots of financial advisers out there who can help even your bank can help . You can totally go down the cash buyer route but I can’t see why you would be refused a small mortgage with the cash sum you have . Definitely seek some advice .

The estate agent will probably ask for proof of funds/where you got the money from, this is due to money laundering regulations. A solicitors letter detailing your inheritance share should suffice.

Yes it will appear in your account but beware sometimes probate can take a long time. So even though the house has sold you will need to wait.

If there is probate

@mortgagenovice

I'm so glad I asked, I was so nervous to post!! Thank you all so much, all this info is priceless to me. Will take everything on board.

You ask away! Ask questions on every step of this process if you want to. There is a huge amount of knowledge and support on MN.

As long as you remember this is still the internet and just because someone says they are something, like a solicitor, it's not a guarantee that they are one.

There are threads on here on certain places. Should I buy in this part of town or that one. And threads asking 'which of these houses would you buy?' It can be daunting when you've never bought a house before.

As a separate issue - is a solicitor dealing with probate for the deceased's relative's estate?
If so, do not bank on getting the full sum the day of completion of the sale of the property. Depending on what is going on with the probate of the estate you might have to wait a bit longer to get the money. This is a common issue we have - beneficiaries buying a property to tie up with the sale of a deceased person's house but there may a delay before the money can be released.
All debts have to be settled, tax issues dealt with, if there are potential claims then the 10 month waiting period might not be up. Even then, the estate accounts have to be completed and approved before all the money can be paid out.

Ask for a letter from the solicitor/ executor stating that you are to inherit and an estimated sum due. Then when you get the money you should have a letter confirming the amount, you will need this for money laundering checks to prove where the money came from.

Thanks again everyone. Probate is all completed thankfully, another family member has been living in the property for a couple of years so once it sells that's it done. A lot to think about here, thank you!

Just keep paper work relating to your inheritance as the solicitor when you buy will need proof of where money came from, to prove its not from criminal activity such as drug selling!