When to inform mortgage provider?

dkennedy1001

Hi,

I recently got planning permission to attach a new house to my current detached house. My current house has gone up in price from £500k to £625k over the past few years and I am due to remortgage this time next year.

Planning to one side my LTV has probably dropped from 95% to 75% due to price increases thus allowing me to get a cheaper mortgage next year which is great and something I want to do.

If I tell the mortgage provider when I am remortgaging I intend on building in a year or two they might start valuing my current house a lot less as it would be dropping in value from being a detached house to a semi so my LTV would remain high and potentially stay at 95%!

So my question is, can I just not mention anything about my planning when I go to remortgage next year get the lower LTV on the whole plot for say a 2 year fixed then just build the new house? Then after the new house is built and I am remortgaging again after 2 years inform the mortgage lender at this stage about the build.

Essentially I would like lower rates as soon as possible and one thing to note I won't need a mortgage for the new build as I will save it up.

Thanks

Thrugelmir

You'll need the mortgage lenders permission to build the new property. To do so without will be in breach of your mortgage terms and conditions.

dkennedy1001

If I wait until after I get the lower LTV to build which will be the case anyway will they at this point want me to remortgage again or could I see out my current lower LTV 2 year fixed or until I'm selling either house?

Thrugelmir

You'll need to divide the existing plot and obtain separate titles. Without the lenders permission you cannot effect this change. If you build the house without permission you will not be able to sell it. Far more sensible to do it correctly from the start. As your lender could simply be bloody minded and the outcome costly to you.

dkennedy1001

I read elsewhere that splitting the deeds is only necessary when one plot is being sold and not when building and both plots still remain under my ownership.

Thrugelmir

dkennedy1001 wrote: »

I read elsewhere that splitting the deeds is only necessary when one plot is being sold and not when building and both plots still remain under my ownership.

Then how do you propose to remortgage in the future? Financial relationships are built on trust. There's no shortage of good borrowers to choose from when a choice has to be made.

Bravestar

dkennedy1001 wrote: »

Hi,

I recently got planning permission to attach a new house to my current detached house. My current house has gone up in price from £500k to £625k over the past few years and I am due to remortgage this time next year.

Planning to one side my LTV has probably dropped from 95% to 75% due to price increases thus allowing me to get a cheaper mortgage next year which is great and something I want to do.

If I tell the mortgage provider when I am remortgaging I intend on building in a year or two they might start valuing my current house a lot less as it would be dropping in value from being a detached house to a semi so my LTV would remain high and potentially stay at 95%!

So my question is, can I just not mention anything about my planning when I go to remortgage next year get the lower LTV on the whole plot for say a 2 year fixed then just build the new house? Then after the new house is built and I am remortgaging again after 2 years inform the mortgage lender at this stage about the build.

Essentially I would like lower rates as soon as possible and one thing to note I won't need a mortgage for the new build as I will save it up.

Thanks

What monstrosity are you planning to attach to your currently detached home, presumably to make a pair of semi's, that will adversely affect the value of your home.??? :huh:

Normally, planning permission can only add to the existing value of the property as in most cases, the cost of any development is less than the value it adds - if is isn't, think again!

Yes, the current value of your existing home will probably decrease if you attach another home to it ... but then you have 2 homes which hopefully is worth more than the one as it stands at present.

So, planning permission shouldn't normally reduce the value of your property. Whether it will allow an increase in the value depends - there is no guarantee you will actually build what you have gained planning permission for, and the planning permission is time limited and may not be able to be renewed if it expires (but usually it can be quite easily)

You will need permission of your mortgage provider to actually develop the land, such permission will not usually be unreasonably denied (but probably would be if doing so will reduce the value of the overall property, but even that could depend on values involved - as long as what you end up with something that more than covers the max. LTV of the mortgage, they might even allow you to go ahead anyway.)

But I think we are getting into the realms of fantasy here. If extending the property is going to decrease it's value, DON'T!