Can we remortgage the house if we have a rent free "tenant" due to will clause

My husbands mum recently passed away and has left him her house. However, this is on the proviso that her partner continues to live there rent free until he leaves or passes away. Myself & my partner have no issues with this however, we are currently renting a house at present and this seems somewhat stupid as my partner owns a house of substantial value.

Now we know we cannot throw him out, nor do we wish to but what are options regarding using this property as equity to get ourselves on the property ladder. Our credit rating is poor at best. But we think we could get a sizeable deposit which will be confirmed once the will comes out of probate.

Many thanks

Well first of all you are already on the property ladder and as such a major part of your wealth is invested in the property market. To add a second property would mean that you are concentrating your financial risk rather than following best practices and diversifying those risks. And borrowing to achieve it just adds to that risk!

Given the current economic situation, the high level of borrowings and the excessive housing stock, no one can tell how this will turn out, so why exposé yourself to these risks unless you have to? In your current situation you will benefit from rising prices, while suffering little from downward trends. Add a second house with it's associated borrowings and you have have a very different picture.

My bottom line is to never take on more financial risk than you absolutely need to.

We can easily afford a mortgage though. And have been able to do so for some time. But were unable to get a deposit together as we have been renting. It seems silly to be paying rent on a house at £600pcm instead of paying a mortgage at the same rate, as the rent is dead money. Technically we are on the property ladder. But we are getting no benefit from it and we will see no such benefit until his mothers partner moves or passes away, neither of whic.h seem very likely to ne happening for some considerable time.
Whilst I appreciate your answer, the question was whether we would be able to remortgage the house to buy our "own" house not whether we should do.

As you seem to be based in the UK and askaboutmoney.com is an Irish site, you probably won't get access to the expertise you need here.

The 'rent-free' house is useless as security to the bank as, if you default, they have no way of getting their money back - they can't turf the tenant out any more than you can. So you are effectively looking for a 100% mortgage on the house you want to buy so, particularly with your poor credit rating, it is unlikely you would get a mortgage.

sami2056 said:

We can easily afford a mortgage though. And have been able to do so for some time. But were unable to get a deposit together as we have been renting.

Click to expand...

Notwithstanding your current outgoings on rent, if you are not able to put a deposit together, then you can't afford it. Put the deposit together first and then go back and reassess at that stage.

Remember, there are additional costs associated with ownership - insurance, property tax, running repairs - replacement of fixtures, fittings, etc.

We have got a deposit now as we were left a substantial sum in the will also. But not sure with a not great credit rating whether this would be enough even if we put 50% deposit down. Not sure how much your credit rating is a factor, if you have the funds available. Never attempted to get a mortgage but I presume its worked out in a similar was to your credit rating when applying for loans or store credit.