6 month limit on mortgage after buying - even if I convert to flats?

Big_Zee

Hi,

I am looking at buying a house as a cash buy, which is currently split into 2 flats (2 seperate entrances not internally connected) but all on the same single freehold.

My plan is to do up the flats, and split them into separate leaseholds, then sell one of them and keep the other.

I understand that most (all?) mortgage companies require a property to have been held for a minimum of 6 months until you can re-mortgage, however would this still apply in my case where I am effectively creating 2 new properties? Ideally I would like to be able to get a mortgage on the flat I decide to keep as soon as possible, so don't want to wait 6 months.

Thanks in advance

Dave_Ham

Hi - I do not think you can get round the 6 months ruling and they would have complete visibility of purchase price etc. so will not be keen to lend.

This will be in addition to likely restricted loan to values as they will be occupied for the first time in this status (newly converted)

I am sure there may be some opportunities to mitigate some of these issues, however not had a case like this in the current "criteria" climate and therefore can only really talk generally as would take a fair bit of time to work a solution.

Hopefully someone will be on soon who has had a case like this recently?

kingstreet

I agree with Dave,

Six month rule will apply, as will newbuild/conversion LTV restrictions on first occupation.

Wh05apk

The 6 month "rule" is not a legal rule, and some lenders can/will be flexible on this.

Speak to a good broker.

Big_Zee

Thanks for all the advice above - on the point "newbuild/conversion LTV restrictions on first occupation" - this seems like another issue - is this seen as a major problem at all? How much of a restriction can this be, as I obviously wouldn't want a potential buyer to have issues as well.

Thanks

Conrad

To be frank it's impossible to predict how a future buyers lenders valuer and legal department will react. In the end as long as they are perfectly safe in lending and the property has proper and clear title and a proper property managment co in control of maintenance and lease arrangments, it should be ok.

I've dealt with a few of these and whilst not plain sailing we got there in the end with a few changes made to the property / deeds / lease and what not. It's all about the lender being able to gainfuly reposses and re - sell without any issues. As long as you present the property and legals as a lender would wish, your'e good to go.

kingstreet

A newbuild or newly converted flat will see a maximum loan to value as follows;-

Halifax 80% (65% if second home or BTL)
Nationwide 75%
Abbey 75%.

Lenders picked at random, just for examples.