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.

Then enjoy choosing a property and living in it. Good luck you are very lucky to be in that position (I do appreciate you have lost a relative thought).

If you are used to renting you want to make sure you have cash longer term for repairs , carpets etc , as well as the buying costs , so don't overstretch

The buying process can be horrid , but your own roof will be worth it

Depending on your circumstances, age, income etc think about whether taking a small mortgage could make a lot of financial sense, and allow you to keep some of the inheritance as a savings buffer. It’s never been cheaper to get a mortgage.

If you are 30 say then For example if you inherit £100k and that’ll enough to buy a 1 bed flat where you are, then getting a small mortgage of £50k over 25 years will cost v v little. If your earnings might go up that’s good, if they don’t then it’s still probably less than you are paying now if you are renting.

Do get a survey on any property you buy as some properties that cash buyers can buy aren’t mortgageable for a future buyer. It’ll make it harder to sell.

A good mortgage broker will talk you through options.

What MaryIsa says makes a lot of sense.

Another consideration is whether a manageable mortgage would help you ‘future proof’.

Would an extra bedroom give you a room to rent out and give you income if you hit hard times?

Would it give you an extra bedroom and so avoid moving again in a few years? Because the process of selling and buying at the same time is more stressful than being a FTB, and more expensive because you don’t get the FTB stamp duty break.

@Feelinghothothottoday

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.

You'll need a grant of probate before the sale completes so any probate related delays will be earlier in the process, rather than once the house is sold.

OP if you budget about £1500 to £2k for the purchase (a leasehold property will cost more, so do bear that in mind) you shouldn't go far wrong.

Do remember that as a cash buyer you will be very attractive to vendors, so depending on the market whey you are, you might be able to negotiate a better price than someone who needs a mortgage. I'd recommend reading reviews carefully before choosing a conveyancer. Ours costs a bit more than some but she is fantastic and I wouldn't use anyone else after using her 3 times recently. Going with an online firm might not work out cheaper in the long run, and the frustration of not being able to speak to the same person each time, especially if you're new to house buying, can make the process even more stressful.

@RainingBatsAndFrogs

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

Be careful saying OP is a first time buyer, the property being sold may have been transferred into the names of the people inheriting, and this will make the OP not a first time buyer in the eyes of HMRC.

@RainingBatsAndFrogs

What MaryIsa says makes a lot of sense.

Another consideration is whether a manageable mortgage would help you ‘future proof’.

Would an extra bedroom give you a room to rent out and give you income if you hit hard times?

Would it give you an extra bedroom and so avoid moving again in a few years? Because the process of selling and buying at the same time is more stressful than being a FTB, and more expensive because you don’t get the FTB stamp duty break.

Just seconding everything here; all really good things to think about.

Another thing to consider as you are a low income earner. Are you receiving "universal credit"?

Is there a time limit for receiving the inheritance and purchasing a home in terms of impacting universal credit?

Another thing to sort out once you have bought a property is a will.

The only time you would be forced to take out a mortgage even if you have the cash to buy and do any renovations is if you have a help to buy ISA or LISA and want to get the bonus.

regarding solicitors; not a cheap online conveyancer and not necessarily a high street dinosaur either. The 'old family firms' can be very expensive, slow, disappear on Fridays etc.

A few years back, but I used a site called reallymoving.com which is still there; lots of hints and tips and you can also get quotes easily.

you'll also need a survey - you don't HAVE to have one with no mortgage but it protects against the big things like subsidence with your house insurers. Surveyors do need to be local, solicitors can be anywhere in your country.

Be careful saying OP is a first time buyer, the property being sold may have been transferred into the names of the people inheriting, and this will make the OP not a first time buyer in the eyes of HMRC.

Do check this.

I'm afraid that this is going to come across as patronising but here goes ...

Most people buy with the help of a mortgage i.e. they can't afford a house with just the money they have (their equity) so they borrow some more (the mortgage) and the two together make the purchase price. Mortgagors are not people who lend money because they are kind; they are a business who have to consider worst-case scenario. Thus they will check the house over: they want to know that it is not crumbling about your ears, that it's not potentially risky due to (for example) asbestos, that it is worth the agreed price, etc.
If you are a cash buyer then you do not have this 'brake' on your transaction. For example, you don't have to have a survey. Just be aware that you could be talked into things and won't have someone sitting in a mortgage office saying, "erm, that's not a good idea - we're not going lend on that".
Get a friend / second opinion on board. Good luck with your property search. Exciting times!

There's some very good advice above regarding purchasing a property.

Another thing to factor in is costs of homeownership compared to renting, if that is what you are used to. You will be responsible for all maintenance and repairs. If the boiler goes, you get a leak in the roof, the fence blows down, you will need funds to pay for these, so do save something if you can for unexpected issues.

You will also need to budget for expected maintenance such as new windows, kitchen, bathroom, carpets, general decorating etc. Not very often but big costs when you decide they need doing.

I had this scenario, I received a large sum of money when my gran died and her house was that could be put into a property of my own.

Yes the money just went into my account when the sale went though. Probate had already been sorted and my family member sorted all the inheritance tax etc before I received it (the proceeds from the house sale were also being split between various family members)

We are going through the process of using this for a substantial deposit on a property that will still have a mortgage.

Check out some of the mortgage lenders and see what they are offering, I have recently been looking at hsbc and at nationwide for example. If you put down more than 40% of the value of the property of the deposit then hsbc are offering rates of 1.29% on a 5 year fixed rate for example,

Pps have given several really good reasons for wanting a mortgage. Lenders are apparently fighting hard for borrowers who have large deposits and small loan to value like you would be. Perhaps you could take out a small mortgage and afford a slightly bigger place. A small mortgage is likely to be so low that it's will probably be less than you currently pay in rent. Plus the value will go up more than the value on a smaller place.

Or as a pp suggested you could also just keep back some of the inheritance for a rainy day fund/renovations (renovations would increase the value of the house even more)

You should look about at what's available on right move and chat to a mortgage advisor as there is no obligation just by having a chat with them. Happy to give you deets of my mortgage advisor if you pm me.