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  • Property-a-holics

    Permission from mortgage provider to build ?

    Hi all.

    I have just put in an offer for a 5 bedroom house which I intend to turn in to a HMO . The offer has been accepted.  The house comes with a large rear garden  which happens  to have parking  to the rear . These parking spaces just happen to be at the end of a cul de sac.  The space will definitely be big enough for a development  of some kind subject to PP.

    The deal stacks on the house alone and the possibility  of the development  is a bonus.

    If I owned this property with a mortgage and had a scheme approved am I right in thinking I would need to get a title split .  This would leave me with a house and a building plot.

    How would this affect my mortgage .

    Would be good to hear from anyone that  has done this.

    Thanks in advance

    Wonderebb

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    Your standard Residential or Buy to Let mortgage will not allow you to:

    • Build
    • Split the Title

    You mortgage conditions will not allow construction as it may affect the value of the asset they have security on AND they wont allow the title split as by definition the title they have security on will be loosing land (value).

    What you are looking for is short-term finance be that Bridging Finance or a Development Loan. That will allow you to purchase the site, the lender should also be happy for you to split the title (and them take security on both titles). They are a lot more flexable and the risk they take is factored into to the rates/fees they charge as well as the security they will want (low LTV).

    Personally my move -  I would approach a bridging lender with no early repayment charges, purchase the site & split the titles asap. Then remortgage the main house onto a HMO mortgage and keep the plot on short-term finance to start construction. If your solicitor is good he may be able to split the title almost immedietly allow you to repay a large sum of the bridge off when you remortgage the house onto HMO mortgage (got to be careful of 6 month rule here).

    A good mortgage broker such as Bespoke Finance on 08009202001 or email hello@bespokefinance.info will be able to assist with the process - the purchase finance & the hmo remortgage finance.

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    _________________________________________________________________________


    My posts are not financial advice, just a rambling guy passing time on a coffee break.
    The team at Bespoke Finance offers advice, including Limited Company Buy-to-Let , HMO Conversion and Cheap Life Insurance.

    _________________________________________________________________________


    I hope this is not too late to be of use to you. I can confirm that I have split the title as you describe on more than one occasion, with the lender's consent (standard BTL mortgage). A valuation was required to satisfy the lender that the value of the house (without the land) provided sufficient security to meet LTV requirements. My solicitor then dealt with the split.

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    Hi,

    Thanks for the info here.

    I'm in a similar situation to the OP and just wandered, did you purchase the property and then split the title further down the line? as i assume it wouldn't be possible to do so from the outset when purchasing on a standard BTL?

    If this is the case then I assume only a cash purchase or bridging finance would work. Is this correct?

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    Hi,

    I am going through this on my own residential property with resi mortgage as I recently got PP for a seperate 4 bed house in the garden.

    So far I have contacted my lender and today they sent out someone to value the current property taking into account the missing/reduced land for the new property.

    They will report back to the lender what they think its worth

    Lender will work out whether I am still under the LTV specified in the mortgage product I am currently on with the new reduced valuation of the current property.

    I presume lender will say yes if I am still within the LTV range for my product.

    If I am not  I presume lender will say a straight no OR no unless I reduce the outstanding mortgage OR I switch to one of their other mortgage products where I may get hit with an early redemption charge of 1 or 2 % (can't remember which it is).

    If its a no of any kind I will get all my ducks lined up next March for when my 2 year fixed expires and get the title split at the same time of remortgaging with a different lender

    If they say yes I will see see a solicitor and get them to transfer the piece of land into mine or my wifes name only.


    Hope this helps




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    I did the same thing 10 years ago

    I believe the Planners don't like the Project your thinking about

    My advice would be to go for outline PP as soon as you can

    Knowing Planners as I know them I don't envy your position 

    Get it in writing that they will support you ???


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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.