Selling your garden when you have a mortgage

roasty79

Hello, wondered if someone can provide me with some advice.
We are looking at buying a house that needs serious renovations. The end of the garden has planning permission for a 3 bed detached house. So we thought great we can sell the land which will pay for the refurbishments.
We will need a mortgage to buy the house and the land which comes as one plot. We cant see that the price of the land will have any affect on the cost of the house ( the land currently has an old workhouse on it and basically used as an area to turn cars around in) . The house still maintains a large front and rear garden. the whole plot is less than an acre too.
However our mortgage advisor is telling us that lenders wont allow us to sell the land once we have a mortgage on it ??
any advice would be great
Thanking you in advance for any advice

amnblog

Your mortgage adviser is right if you are seeking a residential mortgage and the property is under one title.

Split the title and buy the land cash, or finance it separately.

minimike2

You will need to approach your mortgage lender for permission as the land will form part of the security which they took and will have been considered as part of granting the mortgage.

Write a letter outlining as much detail as possible for their consideration - The size of the land, what will be left - A photo from Google Earth edited with the area proposed for sale may help.

As part of the sale the deeds will be split as amn says. The solicitor dealing with the sale can liaise with the mortgage lender to confirm the amendments.

Who is the lender, as they will all have their own policy on this?

*edit - Ah you haven't bought it yet - In which case yes just buy separately now for ease, as the above is what you would need to go through once owned if you buy as one now.

roasty79

Our Lender is Nationwide. So I would potentially be possible to do once we have brought the property if we could prove it would take no value from the house?

roasty79

I don't think the vendors are prepared to split the land, also we wont have the cash to buy it outright.

minimike2

Never asked Nationwide the question - Has your broker approached them to ask their policy on it, or just assumed they would not allow it?

The good thing is that if you have yet to buy it and Nationwide say it is not possible, you can apply to a different lender who does allow it.

Have you approached the vendor about buying as two separate plots? You should ask the question first....

roasty79

minimike2 wrote: »

Never asked Nationwide the question - Has your broker approached them to ask their policy on it, or just assumed they would not allow it?

The good thing is that if you have yet to buy it and Nationwide say it is not possible, you can apply to a different lender who does allow it.

Have you approached the vendor about buying as two separate plots? You should ask the question first....

would that be simple for them to do the vendors? they are looking for a quick hassle free sale and just want to get rid now as need the money to pay for care.


could we get 2 mortgages on the land/house as couldn't avoid to buy land outright?

minimike2

Not an easy question to answer. I have seen deed splits be very smooth. I have also seen them be awful and drag out for months. There can be a whole heap of legal issues to deal with.

Mortgaging land is a whole different ball game to a mortgage for a house purchase but you might not have to go down that route - split deeds, smaller deposit on the house, pay cash for land, is one option, but you will pay a higher interest rate on the mortgage if the LTV is affected. Also you may encounter an issue with the valuation if the valuer deems the property as less valuable without the land proposed to be split off.

Are you dealing with a broker or the advisor from Nationwide?

roasty79

currently just an independent mortgage advisor who it putting our application in.
we wouldn't have the cash for land and want to keep some equity back so we can start renovating the house.

molerat

Get 3 valuations done.

1)Value of property as is.
2)Value of property on smaller plot (with a house at the bottom of the garden)
and value of plot with PP.
3)Value of property on smaller plot with intended renovations done.

Give those figures to your advisor and get him to find a lender who will give you a mortgage on that basis. Base your borrowing on the un-renovated property on smaller plot. With all the numbers your adviser should be able to put a case to underwriters if necessary.

roasty79

The issue is that the vendors have only given us a few weeks to get a mortgage in place so we are having to organise the easiest option which is mortgage as one plot and then hoping to sell the land later on.


From everyone's replies is does seem possible just the harder way around it?