Probate mortgages explained

If you’re unsure about what probate is, how long it takes and how much a mortgage might cost for a house you’ve just inherited, read on or reach out to a mortgage broker.

• We have experts that can explain how to put an inherited house in your name and how probate mortgages work.
• They have access to hundreds of lenders and can check your eligibility without damaging your credit score.
• No matter what your situation, they work to find you an affordable solution.
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If you’re a benefactor and you’re set to own a property that’s been left to you in a will, you might be wondering what to do next. How much inheritance tax do you owe? Is there an outstanding mortgage that needs paying and could you afford a bigger mortgage if repairs to the home are needed?

You might have inherited your parent’s home and this can bring up lots of emotions and questions about whether to keep it, rent it out or sell it altogether.

That’s where we can help.

This guide has been created to help you make sense of what your options are and where you can go for clear, simple and honest advice about getting a mortgage for a house that’s going through probate.

I’ve inherited a property, what should I do?

You’ll need to decide if you're going to live in it, rent it out or sell it.

Before that though, it has to go through probate. And before that? You’ll need to work out how much inheritance tax you owe.

What is probate?

Applying for the legal right to deal with someone's property, money and possessions (their 'estate') when they die is called applying for probate.

It’s the legal process of certifying a will. If you have been named in a will and have inherited a property, it will need to go through the probate process.

You won't be able to do anything with the house until it’s gone through probate. If there’s currently a mortgage attached to the property with an outstanding balance, contact the lender and explain the situation.

Usually, they can be sympathetic and while they’ll probably still charge interest, they may provide a grace period with suspended repayments until the estate is settled.

The probate process explained

If the person who died has left a will, it will likely name an executor who is in charge of carrying out the instructions of the will. This could be you, another family member, a trusted friend or a third party agent like a solicitor. Whoever is named the executor has a lot to do before the probate process.

• They need to collect mortgage and title documentation.
• Find out if the property has an outstanding mortgage.
• Check if mortgage repayments are covered by insurance.

As the beneficiary, you can then check if you’re liable to pay Inheritance Tax.If there isn’t a will and the person that died doesn’t have a living spouse, you’ll need to apply for a ‘grant of representation’.

This is also referred to as probate and if you’re granted probate, you’ll have access to their bank account, allowing you to arrange for their assets to be sold or passed on to beneficiaries. Their funds and collective estate should also be used to settle any debts and to pay any associated taxes.

Inheritance tax and probate

If you do have to pay Inheritance Tax, send the appropriate forms to HMRC and wait 20 working days before applying for probate.

If the property you've inherited is valued at more than £325,000, an inheritance tax of 40% is charged (or up to £650,000 on the second death of a married/civil partnership couple).

This £325,000 nil-rate band has been frozen until April 2026.If you have to pay inheritance tax this can cause delays to the notoriously long process of probate.

A mortgage isn’t included when calculating tax liabilities

However, having a section of the property that remains payable on a mortgage means it won’t be regarded as part of the estate.

So, if the property you inherit is valued at £500,000 but has an outstanding mortgage of £200,000, you would only be charged an inheritance tax on the value of £300,000.

Therefore, if the property you inherit has a mortgage balance owed, remember to deduct this from the value of the property when calculating whether you’re liable to pay Inheritance Tax.

Some homeowners that want to pass on inheritance decide to take out a mortgage on their property to reduce the Inheritance Tax and therefore the overall sum they can leave to their beneficiaries.

This means that their children or beneficiaries receive an inheritance early while the funds can also be used to supplement a pension income, fund a trip or make home improvements.

Always seek independent financial advice by an FCA regulated financial advisor before making a decision about getting a mortgage, whether that be to reduce the amount of Inheritance Tax your beneficiaries pay or to remortgage a house you’ve inherited.

Applying for probate

Once you know how much tax you need to pay you can begin the probate process. Here’s what you’ll need when applying for probate:

• The original documents including the will as photocopies won’t be accepted.
• To know the estate’s value (a chartered surveyor can help with this)
• To have £215 for the probate application fee if the estate is valued at over £5,000.

Once you have these, you can apply for probate yourself online or by post, or pay a probate practitioner (such as a solicitor) to do it for you.

How long does the probate process take?

It can take as long as 6 months but some applications complete within 8 weeks. If the property is left vacant for this period of time, you might want to consider vacant property insurance.

Should I get vacant property insurance while waiting for probate?

You might know this as empty house insurance - it pays out in the event that the property is broken into, damaged or damages a neighbour’s property (say your chimney falls off in a storm and hits your neighbour’s property).

The level of cover you receive through vacant property insurance will depend on lots of factors like the cost of your premiums, the type of property, the security of the property and even the location of the property.

An uninhabited property that has been empty for a while can be a magnet for squatters and thieves, so it can be a good idea to repair any broken windows and entrances and have modern locks installed throughout.

Should I sell, rent out or live in the house I’ve inherited?

Selling a house that’s been inherited

• If you decide to sell it, you could make a profit and use the money to clear debts, go on holiday or reinvest into another property. You may be able to get an ‘emergency grant of probate’ that allows the property to be listed after just 10-14 days of you inheriting it.
• You will only pay capital gains tax on an inherited property if you decide to sell it. If the property has increased in value since you inherited it then capital gains tax is due on the profit.
• Capital gains tax is levied at 18% on gains from residential property if you are a basic-rate income taxpayer. If you are a higher or additional rate taxpayer the rate rises to 28%.

Renting an inherited house out as a landlord;

• If you want to rent it out, you might need to modernise the property and depending on your plans, you could need a buy-to-let mortgage.
• You’ll need a plan for how you’ll attract tenants and it can be helpful to look at similar properties in the area and compare how the buildings look and how much rent is being charged.
• Most lenders require the rental income to cover 125% – 145% of the mortgage offered. As a result, be sure to check the rent your property is likely to achieve.
• You’ll also need to think about how you’ll pay a remortgage that’s reliant on rental income. If your tenants decide to leave, how would you cover the cost of your remortgage without them and how soon would it take to find another paying tenant?
• Property management is also something to consider. You could pay a letting agent to manage it and to find you tenants or you could do it yourself and save on letting agent fees.
• Money would need to be set aside for unexpected costs too. If the boiler stops working, then it may need expensive repairs or even replacement and a landlord must have a way of covering unforeseen costs of this type.
• Gas boilers need to be serviced each year, and legally they must have their safety assessed by a qualified engineer.
• You may also have to pay income tax on the rental income that you will get from letting out the inherited property.
• Income tax will apply to any profit over £11,500 that you earn from rental income, however, this is based on your turnover rather than just gross profit.

Living in a house you’ve inherited

• If you plan to live in it, whether that be permanently or as a second home, you’ll need to let HMRC know which one is your main residence for tax purposes.
• If you move into the property and it becomes your main residence capital gains tax won’t be due if you do decide to sell it.
• Some benefactors like the idea of keeping their family home but still want to put their stamp on it. There are mortgage lenders that provide loans for renovations.
• You might want to extend the building, create a home office or update the kitchen. If eligible, you could mortgage the property to release funds or remortgage if there is already a mortgage in place.
• The mortgage would be secured against the property and if you failed to meet your repayments on time and in full, you could lose the home through repossession so getting an affordable mortgage with manageable repayments is crucial.
• Check your affordability and then check it again. It’s a big decision so get advice from people you trust, including close family (perhaps those without an invested interest) and then external professionals including a mortgage broker and a solicitor.

Inheriting a property with an outstanding mortgage

In some circumstances, when someone dies, their estate is totalled up and before it is given to the beneficiaries named in the inheritance, it is used to pay any debts and that can include a mortgage.

Furthermore, the person who gifted you the property might have had life insurance. Depending on their policy, the cost of their mortgage repayments could be covered for a set period of time or completely. That’s why it’s always worth checking thoroughly whether insurance is in place as if an outstanding mortgage is owed, this could save you a lot of money.

If there is no insurance in place to cover mortgage repayments for a property you’ve inherited, you could either repay the balance using savings or apply for a remortgage on the property in your name.

What happens to an outstanding mortgage after probate?

If no one is designated to inherit the loan and no one pays, the lender will still need to collect the debt. Therefore, the lender could resort to selling the property to recoup the debt.

To avoid this happening and to keep the home after probate has been awarded, you’ll need to either repay that mortgage or arrange a remortgage in your name under new terms and conditions that allow you to affordably repay it.

If you apply directly to the same lender to continue the current mortgage, the terms, conditions, rate and term you’re charged for that remortgage will be different. Therefore, the mortgage itself will be a new agreement.

That’s because the rate charged for the previous owner’s mortgage would have been based on their circumstances at the time they originally took the mortgage out. Your circumstances are likely to be different from that of the previous owner, for example, you might have a different income or bad credit.

Your unique circumstances create a different level of risk to the lender, who could lose money if you were to default (not repay your mortgage).

Inheriting a property in negative equity

If the property you have inherited has negative equity, then the debt that's attached to it is more than the value of the property itself.

If the property is in negative equity or you’ve no means of making repayments, you can’t be forced to repay the mortgage and you could decide to let the mortgage lender repossess to clear any outstanding money owed against the property.

However, this can still put you in a sticky situation as even if you sell, the sale of the property probably won’t cover the cost of any outstanding mortgage and therefore, you could be left with a debt to pay.

Always get professional advice. If you’re unsure about your next steps after inheriting property in negative equity, it could be worth speaking to a solicitor and a mortgage broker.

A mortgage broker can advise you on the property market and can check your eligibility for a mortgage with various lenders in case you want to keep the property and take out a mortgage in your name. While the property may be valued at less than it’s currently worth, it may be possible to make improvements and increase its value overtime.

Inheriting a house with no mortgage

A house with no mortgage is a valuable asset. If you inherit a mortgage-free property and decide to keep it rather than sell it, you could use the value locked up in the property with a mortgage. Some people do this via later-life products aimed at over 55’s like equity release, whereas others opt for a standard mortgage with repayments.

How you spend the money accessed through a mortgage or equity release is up to you. Some people decide to release equity to purchase another property or to use the funds for home improvements.

If you’re looking to refinance an inherited property, compare your options as some are more expensive than others and depending on what it is you want from your agreement and your circumstances, you may require a niche lender.

Getting the right mortgage can save you money in the long run and if you take the advice of a mortgage broker, you could be matched with a lender quicker with the confidence that you’re getting the best rate you can.

Can I get a mortgage for a house I’ve inherited?

This will depend on your ability to meet your chosen lender’s mortgage criteria. In other words, you’ll need to prove that you have good affordability for a mortgage, whether that’s with the same lender (if there’s already a mortgage in place) or a new one altogether.

We’ve helped lots of people get a mortgage for a house, bungalow or flat they’ve inherited, including buildings made with non-standard construction materials like barns and listed buildings.

How does a lender assess my affordability for a mortgage on an inherited property?

Whenever you apply for a mortgage, the lender will want to determine your affordability for the size of the loan you’re applying for.Your ability to prove your affordability and your general ability to pay a mortgage on top of your current outgoings will determine the outcome of your application.

• Loan-to-value
• Income
• Level of debt against income (DTI)
• Age
• Credit history

Some lenders also apply affordability stress tests which can involve requirements for you (the borrower) to be able to afford a hypothetical interest rate increase. That could occur in the event that the Bank of England (BoE) raises interest rates.

While a fixed interest rate mortgage has unchanging mortgage repayments, a mortgage with a variable rate that tracks the BoE base rate does not.

Whether you’re applying for a fixed or variable rate mortgage, your chosen lender could still apply a stress Test to check your affordability for the amount of money you’re applying for.

Bad credit and mortgage applications for inherited property

Good credit shows that you can be relied on to pay back what you've borrowed. If you’ve taken out a credit card, personal loan or finance agreement and you’ve repaid it in full and on time as agreed, this can help evidence good credit and your credit score may be higher as a result.

Bad credit is a term used to describe financial history that indicates that the borrower isn’t trustworthy and may present a higher risk for missing repayments.

Bad credit is represented by a credit score too, so if you've never had credit or you have bad credit, you might have a lower credit score.

Can I get a mortgage for a house I’ve inherited if I have bad credit?

We’ve helped people get a mortgage even when they have severe incidents like CCJs, IVAs and Bankruptcy. That’s because there are lenders that look at your affordability for a mortgage while assessing your circumstances as a whole.

You might have a high income that comfortably covers any hypothetical debt repayments, or maybe you have a lower income but the credit incident occurred years ago and your recent credit history has improved.

There are so many factors that influence any given individual’s ability to get approved for a mortgage with bad credit, so don’t rule yourself out and ask what your options might look like when you speak to a mortgage broker.

Can a first-time buyer get a mortgage for a house they’ve been left in a will?

If you’re a first-time buyer i.e. you’re someone who never owned a property before, lenders will want to see strong evidence that you can afford to repay a mortgage.

That being said, you won’t necessarily be classed as a first-time buyer, excluding you from schemes like Help to Buy: Equity Loan.

While you might not have owned a property before, once your name is on the deeds, you legally become the property owner.

This can be frustrating but unlike first-time buyers without an inherited house, you’ll have a property that you can either live in, rent out or sell to purchase a property that you really love.

If you do want a mortgage for a house you’ve inherited as your first property, know that just like any other borrower, your income will be assessed.

Lenders can sometimes prefer borrowers with stable jobs and a predictable income but that’s not to say that it’s impossible to get a mortgage after starting a new job or if you’re a contractor.

Owning a property potentially puts you in an advantageous position if you’re looking for your first mortgage because you’ll likely have equity behind you. This can be used as security for a mortgage with some lenders, whereas others may require a cash deposit.

Can a self-employed person get a mortgage for a house they’ve inherited?

If you’re self-employed and you’ve just inherited a house, you’ll be pleased to know there are UK lenders that approve probate mortgages for people with fluctuating income or income that derives from freelancing or contracting.

You’ll ideally have a minimum of 1 years’ trading history with tax returns signed off by a chartered accountant. Most lenders like to see 2-3 years worth of tax returns to prove that your income is regular enough and reliable enough to repay a mortgage.

Getting a mortgage for a house you’ve inherited if you’re self-employed shouldn’t be a hurdle if you have the right advice. Our brokers can recommend your next steps and can check your eligibility for a range of lenders without damaging your credit report.

Can I use inheritance as a deposit for a remortgage on a house in probate?

Yes if you have inherited cash as well as the ownership rights to a property, you could use that lump sum to secure a good deal for a remortgage.

An example of this might be a person who has inherited an expensive property in need of modernisation. Perhaps they have plans to sell it for a profit once the work is finished or alternatively, rent it out.

They’ve inherited some cash but it’s not enough to fund the needed repairs, so they use that cash as a deposit to get the full finance they need to complete the work.

Applying for a mortgage on an inherited house

Getting a mortgage is no easy decision given that contracts can span over 30 years. You might not require a loan over such a lengthy period but nevertheless, getting the best deal could save you money overall and could help you avoid overpaying in exit fees, should you need the flexibility in your agreement to make overpayments and settle the mortgage early.

Look at reviews for mortgage brokers and ask them to check your eligibility before you apply for a mortgage on a house going through the probate process.

Probate mortgage FAQS

How does owning a second home that has been inherited affect the amount of tax I pay?

If you already own a home and decide to keep the house you inherited as a second home, you'll need to nominate one of your homes as your main home and let your tax office know, because you can only have relief from capital gains tax for your main home.

What happens when there are multiple beneficiaries?

If you’ve inherited a share of the house, you could decide to get a mortgage to buy out the other people named on the will. A mortgage buyout would result in the other beneficiaries being taken off any existing mortgage and being removed from the title deeds.

Your ability to get a mortgage large enough to cover a buyout would depend on your affordability, including your income, level of debt, the size of your deposit, your age and the type of property you want to mortgage.

There again, all parties might be happy to share ownership of the property and in which case, you might be able to apply for a joint mortgage, whether that be to make home improvements and increase the value to sell later or to make changes needed to make it a buy-to-let property, sharing any profits made.