Buying Out a Sibling from an Inherited Property
At Rockhopper Later Life Finance we help customers aged 55 and over who have inherited a property jointly with siblings or other beneficiaries and want to buy out the others to retain the property. This is a common situation in estate administration, particularly where a parental home is left to all children equally but only one wants to keep it. The mortgage to fund the buy-out is usually taken by the beneficiary retaining the property, on either the inherited property itself or another property they already own.
We work with customers who are:
- Inheriting a parent’s home jointly with siblings and wanting to keep it as their own residence
- Inheriting a property with siblings who need to be bought out in cash
- Taking on an inherited property for letting after buying out siblings
- Coordinating complex estates with multiple properties and multiple beneficiaries
- Handling the buy-out of step-siblings or half-siblings in blended family estates
- Buying out a former spouse who was a beneficiary under a parent’s will
- Needing to complete the buy-out by a specific date set by the estate administration
Inheritance and family finances often intersect in ways that require care. Siblings who agree on the principle of the buy-out may disagree on timing, price, or conditions. We work with your solicitor to keep the mortgage side aligned with the wider family arrangement, and we move at a pace that suits the specifics.
The buy-out typically happens after the Grant of Probate has been issued and the property is ready to be transferred. The beneficiaries collectively own the property at that point, and the buy-out works by one beneficiary paying the others for their shares. The amount paid is based on the property valuation at the agreed date (usually the valuation used for probate, though sometimes a more recent valuation where a significant time has passed).
The mortgage can be structured in several ways. If the buying beneficiary will live in the property as their main home, a standard residential mortgage is usually appropriate. If they will let it as a rental property, a buy to let mortgage applies. If they already have their main home elsewhere and are retaining the inherited property alongside, the inherited property may be a second home mortgage or a BTL depending on use.
For over 55s buying beneficiaries, the mortgage options follow the same general pattern as other over 55s mortgages. Standard residential if income supports it, RIO if retirement income covers the interest, lifetime mortgage if no monthly payments are preferred or if the amount is substantial. The choice depends on age, income, the amount needed, and intended use of the property.
Where the buying beneficiary is over 55 and the buy-out amount is significant, raising capital against an existing residence (rather than mortgaging the inherited property) is sometimes simpler. This uses the existing home as security for the buy-out funds, with the inherited property coming in unencumbered. The overall outcome is similar but the mortgage arrangement is against the property the beneficiary is most familiar with.
Stamp Duty Land Tax on inherited property buy-outs is a specific area. Where you are already a joint owner of the inherited property (through the will) and are buying out other joint owners, specific SDLT rules apply that may reduce or remove the SDLT charge. Higher rate surcharges for additional properties may also apply depending on circumstances. This is a tax matter and we signpost specialist advice; the conveyancer handling the buy-out will typically have a clear view on the applicable SDLT.
Legal and probate elements are handled by the estate solicitor. Our role is the mortgage funding side. Coordination between the two matters because the buy-out usually needs to happen at a specific point in the estate timeline, and the mortgage needs to be ready to complete at the right time.
The Process
Your first conversation is a relaxed discussion about the property, the estate, the beneficiaries involved, and your circumstances. There is no cost or obligation.
We coordinate with your estate solicitor and complete a full fact-find. We research the market and come back with a written recommendation timed to fit the estate process.
Every buy-out case is different. A two-sibling buy-out of a parental home is a different case from a larger estate with multiple beneficiaries and complex agreements, and our advice reflects those differences.
Speak to a Later Life Adviser
Call 0203 621 5696
Lines open 9am to 5pm Monday to Friday. Alternatively, complete the enquiry form and we will call you back at a time that suits you.