Buying next door... Advice?

nickyola

Hey everyone, hoping someone can help.

The house next door to us has been repossessed and will shortly be going up for sale. We would like to purchase the property and eventually convert it into one house.

Our mortgage deal with the Halifax has just ended, whoop whoop. On asking them, they cannot help us - their legal team would not let us merge the house into one, one suggestion was buy to let, but cannot provide the massive deposit that they would require.

As yet, we do not know how much the property will go on the market for.

Has anyone done this / heard of this before, and who was the mortgage company?

We have made an appointment with a mortgage broker to see if they can help also, but wanted to see if anyone had any experience of this.

Thank you for your help lovelies!!

ACG

You could remortgage your existing property to provide the funds for the purchase?
Then speak to a solicitor about merging the titles? You would need the lenders consent but i cant see why they would refuse it as effectively the property value would go up as the land/property is increasing.

nickyola

Hi ACG,

Are you talking about raising the funds for BTL? There is not enough equity in our house to be able to raise the 30% needed for this option with our bank, we'd looked at this option... Plus, we don't know who the mortgage company for the house next door is, our bank wont remortgage a house that they have had repossessed, so if next door's was a halifax mortgage, we'd not be able to do it through them anywhooo

Feel like banging head against wall...!

Thrugelmir

Knocked together houses are often worth less than 2 separate units.
Rarely do they make good properties without significant internal remodelling. Which just isn't worth the expense. Hence your lenders lack of interest.

TrevW

Hi Nickyola,
I'm in a very similar situation although probably easier than yours.
I have a Current Account Mortgage with Virgin One with no balance outstanding, I also have enough savings to purchase next door outright.
I will need to borrow to complete the renovations though and there would be enough to do this using my existing facility.
Virgin (well RBS) will not allow the merge of the titles unless I redeem the mortgage.
In my case I'm going to go ahead with the purchase merge the titles and then sort the finance for the renovation later. I would have preferred to have the money in place first though.
RBS say that it is too high risk. I'm not sure who they are lending to as I am looking at 10%LTV and about 1.2x earnings.

Anyone have any experience as to whether getting the mortgage on the merged property will be a problem?

Best of luck with yours but it did surprise me that borrowing may be an issue.

Trev.

ACG

I think your looking at this totally in the wrong way Nickyola... either that or im just missing something.

However, what makes you think you need a BTL mortgage? Your not looking to let the property. Even if you were, you do not need a 30% deposit, usually you need between 20-25% as a minimum.

Raise the money against your existing property, you can probably go upto about 85% without too much difficulty - fingers crossed that will be enough if not and you have no other funds then you can raise money against your existing property to form the deposit and then get a BTL but you would then need to let the property out.

I will be totally honest in that i have never had to do this for a client, but i would imagine its possible to do - you havnt mentioned any financials so its difficult to say for sure but i would suggest you go and sit in front of a broker get your information down on paper and let him/her sort out a plan of action going forward, i would be relatively confident this can be done.

JQ.

Thrugelmir wrote: »

Knocked together houses are often worth less than 2 separate units.
Rarely do they make good properties without significant internal remodelling. Which just isn't worth the expense. Hence your lenders lack of interest.

This.

Buying next door may seem like the most convenient solution, but it's very likely to be a loss making venture.

Senior_Paper_Monitor

Two phrases guaranteed to drive a lender into a frenzy of criteria quoting are "property next door" and "knocking one into the other" - and it doesn't need to be both to achieve the impact !

They are a bl**dy nightmare to place (have done a couple in the past and have got one on the desk at the moment - with some added complexities so its doing my head in, but think we've got it placed after three weeks work).

Do not even think about trying to do this yourself and make sure your broker has got a few miles under his/her belt with non standard cases.

holly_hobby

Yep, as already stated, and as SPM has commented - enquiries of this type are generally nigh on impossible to place.

Assuming you get planning permission, you will need the permissions of your mge lender, and this will only really have a change of working if you're playing with 1 singular lender in the mix, ideally purchasing the 2nd property in cash (given the title, exposure and resale issues during the mid-works process), with of course any mge lenders permission for works reqd BEFORE works are commenced.

You'll also obv have to have the title deeds and boundries amended with LR and a new title no for what will now be a singular dwellng. Also your lender due to the title changes (and if you choose not to remortgage at completion to another provider), will need to have your current mge closed down and a new one opened (with replacement charge registration with LR) on the new property title no.

Lenders don't like this type of enquiry because at mid-works stage (ie removal of party wall but conversion to 1 unit un-completed), both properties can be virtually worthless for onward sale - and its just generally a messy, messy process that lenders would rather not get involved in ..... which is why exercises such as this are usually initially cash funded (both properties mge free), and then remortgaged (if reqd) once the conversion into 1 (inc title) is fully complete (and thereby simple for the lender to understand) !

As SPM has stated you need a experienced broker whom has experience of this type of enquiry, or the general industry exposure and miles under his/her belt to have a good grasp of the lender and LR complications and requirements that will present themselves.

Personally unless the combined value (which won't necessarily be double !) and attractivness of the completed single dwelling, will be something really special with good re-sale prospects (as you never know what the future brings), I wouldn't puruse the merger unless you are prepared for the longhaul and difficulty of placement.

If you wanted to have a stab yourself, and given the remodelling issues, types of lenders whom you may wish to initially approach to sound this out, could be more along the self build circut ie Nationwide, Buildstore (whom are just 2 in the market ) .... but I do think you will struggle if finance is needed to fund the pch, with permission from your current lender re the works unlikely .... but hope this helps bottom this out a bit more for you.

Hope this helps

Holly

marathonic

Have you looked as what's available on the market in your area for the total cost of your house, the house next door and the expected renovation costs?

Chances are you'll get a lot more for your money this way and the house will have been designed better as it will have always intended to be a single house.

holly_hobby

ACG wrote: »

You could remortgage your existing property to provide the funds for the purchase?
Then speak to a solicitor about merging the titles? You would need the lenders consent but i cant see why they would refuse it as effectively the property value would go up as the land/property is increasing.

OP won't be able to merge the titles (and have title deeds amended and re-numbered) until they are 1 single dwelling.

Obv this can only occur once planning and the lenders permission obtained ( to remove the party wall, and other changes such as removal of 2nd front door, 2nd kitchen, etc,) and the works completed ... which as discussed above doesn't always result in an increased market and generally where mge finance is reqd or involved, isn't as easy as it sounds.

Hope this helps

Holly