Advice required remortgage

Notsomortgageman

Hello and thanks for reading,

I recently came out of my current mortgage deal so I contacted my usual broker for him to find me a new one and he came up trumps with a good TSB deal, when they started the valuation process they found out the my partner was running a small business from our property and refused to deal with us saying that the property now had a commercial interest, the business is not even VAT registered as its very sporadically and makes not a massive amount of money.

My broker is now saying that no other mortgage company will assist us with the remortgage due to this reason, does anyone know if this is true or am I best trying myself and talking to them personally?

I will say it has taken my partner two years to set this small business up and it is that little bit extra income that's sometimes needed, would probably break her heart if we had to shut it down and she also would be letting a lot of clients down also.

Regards

murphy306

I think you are supposed to let them know about change of use, and also inform insurance about working from home as a business etc too.

Notsomortgageman

My partner has got a separate insurance as clients have to visit our property and we was not aware that the mortgage company would have to be informed of this.

murphy306

I am almost sure it states on the mortgage documents you have to tell them about change of use or similar. A lot of people dont read through the documents but that is normal enough, I am just one of those people who goes through everything with a fine tooth comb

ACG

Companies tend to only go VAt registered when they are turning over £70k. VAT registererd has no baring on the situation.

What is the business? Does it involve customers coming to the house?

As an example, when I set up on my own I had a bedroom as an office. That would not have been as issue as no customers came to the house and it was just somewhere for me to do admin. If the room had been made to an office where customers came and had appointments that would have been very different.

I came across a client who had converted a living room into a hairdressers - sink, laminate floors, mirrors etc and no lender would have leant on that.

As with anything, the devil is in the detail.

Notsomortgageman

Hi ACG, I'd prefer at this point not to say what the business is but yes clients have to visit the property, what I do not understand is why this should effect our remortgage?

Just say we couldn't pay the mortgage repayments this would not make any difference on the resale of the property, just close the business and sell the property surely? I will say also that we have made 100% profit since the purchase also so the amount of equity is very good. I'm just confused on the decision that it becomes a commercial interest so can not be mortgaged?

Quick edit

I said they visit the property, that's not 100% correct, they just visit our land or outbuildings.

Regards

ACG

Someone on here once gave a good explanation when looking at lenders decisions and I think it works here...

Lenders make decisions from the top and it cascades down over all of their mortgages.
The applicant sees it from the bottom.

A lender can not sit there and say we only allow certain types of businesses to be carried out from the property. It is easier to say all or none. It is not practical to say all.

Also, your home is a residential building. It is not a commercial property and so you are presumably not paying commercial rates and possibly do not have all of the relevant insurances...if you do are they valid? Buildings insurance for example.

Notsomortgageman

Our outbuildings are insured as of the business, the property itself is also fully insured as of the requirements of a mortgage. Our residential home has nothing to do with the business, not 1 customer has ever entered and never will so why should this impact on any lending decission?

Regards and thank you for your responses

ACG

The mortgage is secured against the property. The property is not just your home, but the land and out buildings.

Split the deeds and you might get a bit further, but that then incurs legal fees.

You may have buildings insurance, but is it valid if customers are visintg your property?

Notsomortgageman

It's not just buildings insurance but also liability

getmore4less

What are your current lenders retention deals start with those.

have you check the planning requirements for the type of operation being run from these outbuilding.
do you mean proper buildings that form part of the mortgaged property or temporary structures like a posh shed.