Can I buy part of my Dad's mortagaged property?

student88

Hi all
I was wondering whether anybody had any information/advice on this.

Basically my dad owns a mortgaged property. He has quite a large garden and we have discussed him handing over/part releasing some of the land so that I can build my own property on it.

At the moment he does not own the freehold (but has been previously offered to buy it for a couple hundred £s). However his house is still mortgaged and so technically the bank still owns some of the property.

Does anybody whether part releasing a mortgaged property is possible? The property is not large, nor is the area that I would like to purchase - it would just fit a small house on it so we're not talking acres here.

Any information/advice would be very grateful
Many thanks

DVardysShadow

If he does not own the freehold, then he will need the freeholder's permission. If the lease is getting down to around 60 years he needs to buy the freehold, otherwise, even if he gets permission, you are not going to have enough time on the lease to get finance for your build - or if you are doing it from your own funds, you will build something which will be unmortgagable.

It depends how long the lease still has to run and how long ago the price was advised. An option to buy the freehold will become increasingly more expensive as the end of the lease approaches and it is a sad mistake we have seen here previously, for older people to assume that their option to buy out their lease gets cheaper.

Now, buying the freehold is the first step. You probably don't absolutely need to involve the mortgage lender if you can pay for it from savings. But given what you want to do overall, you will need to involve the lender in approving the proposed split of land - the piece your father retains, plus the house must have adequate value to cover the mortgage outstanding. From that perspective, the fact that it is not acres may make it more difficult - and if the lease is becoming short, that may also reduce the value of the bit he will retain under mortgage. So every good reason to sort out the freehold.

bigadaj

Has the new plot got planning,this needs sitting out first. this would have bee easy five years ago, but planning guidance has changed and it might be difficult to get a permission,speak to your council as they may give you a steer.

Simon_gloster

New build policy comes into force here, typically 80% maximum LTV.

Even more sinister is self build rules if you can find a lender to do them without you jumping thru hoops.

If planning is sought and the lease is good, you have many legal wranglings to sort out such as new title numbers.

holly_hobby

Lets not get ahead of ourselves ...

As the property is mortgaged Dad will need to obtain the express permission of the lender to proceed with the build. This is because the value of the property inc land, may be negatively effected by the construction (if not built as a stand alone unit). Before peeps say but an additional construction can only enhance value, not it doesn't, it can make it much harder to market as in essence what you have is a granny flat set up - if no sep title deeds, access or utilites are in place - and gravely affect the lenders security.

If mge finance is reqd to build the property (or later secure a mge on it, or to sell it independently to the main residence), the plot needs its own title registration (deeds), the property must have its own independent access to the main residence, and must also have its own utility supply. i.e can not be spared off the main res suppy. Obv this will also affect the main title deeds, which will also have to be amended to show the change in boundries, again this will all be subject to securing the consent of Dads mge lender (assume Dad will pch freehold).

So, first call is to Dads lender to see how they feel about the suggestion, as without their permission further discussion is useless. Obv, the freehold issue will also have to be dealt with ie he needs to pch it.

Then having an AIP on the build and/or split of deeds with the lender, having the build drawn up, submitted and obtaining necessary consents. Having the lenders consent, I still wouldn't start spliiting deeds etc, until I had the green light on the build from the local planning dept, as obv the split of deeds will negatively affect the value of the main residence via the reduction in boundries/land, esp if the part of garden now being its own entity, with its own deeds, is unable to secure planning permission for a dwelling or anything of value to be constructed by any woodbe purchaser. So only have LR split the deeds, when every other aspect has been verified as a go'er.

If the works do go ahead without lenders/freeholders consent Dad will be in breach of his mge t&cs and lease terms.

Hope this helps

Holly