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Mortgage for inherited property extension?

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  • 13-04-2016 10:21am
    #1
    Dannielle25
    Registered Users Posts: 2 ✭


    Hi all,I have been left a relatives house and would like to sell our own and do up and extend the inherited house.
    My husband bought our house for 160k and there is 130k left on the mortgage. The house should sell for 130k now so it would clear the mortgage.
    Do the banks do mortgages to do up and extend a property? Would I need the 20% deposit or is the house the deposit?
    We are a family of 5 and I stay at home with the kids so we only have one wage coming in. Have never had any problems paying our current mortgage. How much does a family of 5 need to be earning to even qualify for a mortgage?
    Sorry for all the questions and thanks for any info you can give


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    #2
    JimmyMW
    Registered Users Posts: 695 ✭✭✭JimmyMW


    Dannielle25 wrote: »
    Hi all,I have been left a relatives house and would like to sell our own and do up and extend the inherited house.
    My husband bought our house for 160k and there is 130k left on the mortgage. The house should sell for 130k now so it would clear the mortgage.
    Do the banks do mortgages to do up and extend a property? Would I need the 20% deposit or is the house the deposit?
    We are a family of 5 and I stay at home with the kids so we only have one wage coming in. Have never had any problems paying our current mortgage. How much does a family of 5 need to be earning to even qualify for a mortgage?
    Sorry for all the questions and thanks for any info you can give

    Hi Dannielle, I would not be up in the mortgage questions you have asked and i would suspect you would need to talk to a broker regarding this. However one thing that you may have over looked is the capital gains tax CGT, depending on the value of the house that has been left to you, your relationship to the person who left you the house and your previous gains/inheritance in that CGT bracket, you may need to pay up to 33% CGT on the value of the property. Just said i would give you my 2 cents worth encase you did not know that.


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    #3
    Butters1979
    Registered Users Posts: 1,164 ✭✭✭Butters1979


    This isn't much information to give you an answer.How do you mean 'is the house the deposit'? Are you intending to sell the house? If so you say it will just clear the current mortgage. How could you use that as a deposit? it would put you at zero.
     (just realized you mean the new house as collateral)
    If you're selling your property to clear the mortgage and moving into an inherited home, then you are looking for a home improvement loan, as you already own the house. You should not need a deposit for a home improvement loan but it depends. How much are you looking to borrow to extend and do up the house? Would the loan repayments be equal of less than your current mortgage?


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    #4
    [Deleted User]
    Posts: 24,714 ✭ [Deleted User]


    JimmyMW wrote: »
    Hi Dannielle, I would not be up in the mortgage questions you have asked and i would suspect you would need to talk to a broker regarding this. However one thing that you may have over looked is the capital gains tax CGT, depending on the value of the house that has been left to you, your relationship to the person who left you the house and your previous gains/inheritance in that CGT bracket, you may need to pay up to 33% CGT on the value of the property. Just said i would give you my 2 cents worth encase you did not know that.

    Its CAT (capital acquisitions tax) that is applicable not CGT. The rest of what you are saying is correct though.


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    #5
    Gumbo
    Moderators, Society & Culture Moderators Posts: 39,407 Mod ✭✭✭✭Gumbo


    Basically, yes the banks do.
    So let's say you sell your current house and clear the mortgage of 130k.

    You now own the inherited house (subject to taxes and CGT that I know nothing about).

    You can now approach a bank for a mortgage to do the property or a home improvement loan over 10 years etc.

    If you go for a Mortgage the bank will look at the value, proposed value after the works and the offer a sum based on that. So yes the house itself or the equity can be the deposit.


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    #6
    JimmyMW
    Registered Users Posts: 695 ✭✭✭JimmyMW


    Legacy Weak Percolator wrote: »
    Its CAT (capital acquisitions tax) that is applicable not CGT. The rest of what you are saying is correct though.

    Your quite right, my apologies I was mixing up the taxes


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    #7
    seamus
    Registered Users Posts: 68,317 ✭✭✭✭seamus


    Also, although a mortgage seems like the obvious thing over a home improvement loan, do your calculations.

    While the repayments on the HIL over ten years might be more onerous than a mortgage over 15 or 20, the interest repayable and the solicitor's fees, etc in the mortgage might make it way more expensive in the long run.


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