Getting a mortgage to buy a 4 bed property then converting to 2, 2 beds

FlyingPasty

Hi,

My dad owns a 4 bed end terrace house that was originally a 2 bed, but he extended 20 odd years ago doubling the size to a 4 bed.

He has an interest only mortgage which ends in 2016. He's self employed so doesn't want to take out a repayment mortgage, nor does he have the funds to pay off the mortgage - roughly £115k.

I'm looking to buy a place in the next year so he's suggested I buy the property off him and we then convert it to 2, 2 bed houses and then sell one or both and split the money from one of the sales. The 2 bed next door sold in Nov 2014 for £124k. My dad's 4 bed needs double glazing and a new kitchen anyway and he suggested I buy it off him for £140k - which should be in my price range.

My intention would be to just take out a regular mortgage (I've got just under £15k savings for adeposit) and we slowly do the relevant works to convert the property to 2 houses using the £25k my dad will have after I've bought the house from him. I've already emailed the local council who have said we'd need to submit planning permission but I want to know what happens with the mortgage once the property is ready to be split into 2?

My uncle said that i'd need to remortgage as the original mortgage will be based on all the land, so a new mortgage would be needed based on the new plans. This is where he believes I could come across some stumbling blocks as the value of the new smaller house will likely be less then the mortgage was for the original larger property and therefore I'd be in negative equity.

Should I take out some sort of specialist mortgage in the first instance - if there is one to cover this type of thing?

Any other info/advice/experiences with this type of thing would be much appreciated!

Also apologies if it's in the wrong forum!

Thanks

Sam

Thrugelmir

The existing mortgage lender would have to approve the works before they even commence. That's a major hurdle to be overcome.

dimbo61

Sorry this has nightmare written all over this
Your lender will not be happy to split the deeds
The planning department may say NO
The costs of splitting the property may run to thousands of pounds.
The Land registry may also say NO
Hope you know all the building regs and rules that must be followed.
Eco regs, fire regs, etc

Goldiegirl

The lender wouldn't be at all happy about splitting the deeds.

A mortgage can only be secured on one property, not two.

As you say that the smaller properties would be worth less than the mortgage, they simply wouldn't agree to what you are proposing. They wouldn't secure their lending on a property that was worth less than the mortgage, and they wouldn't agree to divide the mortgage in two either.

andyfromotley

Sounds like you are taking on a heap of trouble to sort out your dads problems. Dont would be my advice.