Buy To Let But Didn't know it.

hlane1

Back in 2007 my husband and l remortgaged our then home on a buy to let basis to release some equity that we used as a deposit to purchase our "forever home" a smallholding of some 4 acres. We used the same mortgage broker to set up the btl mortgage with, The West Bromwich, on our old house, and then he set up a self employed self certificated residential mortgage with The Mortgage Works for the smallholding or so we thought. 16 years later we have obtained planning permission on a small plot of our smallholding land, and have a cash buyer in place. When l contacted to Mortgage Works to advise them of this they wrote back flatly refusing to let us sell this plot. On further investigation they advise that our mortgage on this property is also on a btl basis which has come as a complete surprise to us. I have the original mortgage offer and it states the type we accepted was a Self employed self certificated one. We need to sell this plot to reduce our interest only mortgage that comes to an end in four years time.
We have always lived at this property as our main residence, and all correspondence from The Mortgage Works has always come here, so they can't say they didn't know we live here. I have asked for the original mortgage paperwork that we signed back in 2007, what more do we need to do. Any advice would be much appreciated.

MWT

I'm not sure that the problem goes away even if this was a residential mortgage, as you will not always find a lender willing to allow you to sell off a part of the land on the deed as it reduces their security...

Are you in a position to remortgage elsewhere, as that would be the next step if your current lender is not willing to agree, but of course self-certified mortgages are no longer available and access to interest only mortgages can be difficult, so do you have the income to achieve a remortgage in the current conditions?

simon_or

Were you told over the phone that this is a BTL mortgage and not a residential one?

The Mortgage Works only do BTL mortgages now but perhaps they did do Residential mortgages pre GFC. Maybe you got told the wrong info over the phone.

But as above, even if it's residential, doesn't mean The Mortgage Works response would be any different.

silvercar

The answer is to re-mortgage the remaining section elsewhere. Then when you complete on the sale of the small plot the current mortgage is redeemed and the new mortgage is for the remaining part only.

Now that you have some years of accounts it may be easier to get a main stream mortgage.

hlane1

I was advised over the phone that we must have a BTL as "that's the only type TMW do". I am certain we have a self cert, self employed mortgage, and if TMW has changed this since the regulations altered in 2011, they have never told us.
The property was mortgaged with them in 2007 for £334,000 and is now worth @ £600,000 plus so there is plenty of equity.
We have obtained planning permission on one plot and have a buyer in place to pay us £270,000 that we will pay off the majority of the lump sum, and re mortgage the remainder. We are willing to have the property valued by a chartered surveyer etc, and pay the proceeds of the sale to TMW via solicitors . We need to get this sorted as there are potentially three further building plots that have a similar sale value of @ £300,000.

hlane1

P.S. We are retired from working now as we are both @ 70 years of age.

ACG

Can you not arrange for a remortgage of £65,000 which will take into account the reduction of land and let it just sit there until the sale completes? Your solicitor should be able to tie it all up together. 

MWT

hlane1 said:

We need to get this sorted as there are potentially three further building plots that have a similar sale value of @ £300,000.

You can't force TMW to give permission for the sale of the plot, it doesn't matter what type of mortgage you actually have, if they are saying 'no' then you have to remortgage to cover the residual balance on the mortgage, adjusting the property boundary, and complete the sale of the plot and your remortgage at the same time.

Keep in mind that you may have to clear the mortgage to sell the next plot so don't remortgage to something with a penalty on early redemption if you anticipate another sale in the near future...

simon_or

The Mortgage Works is not the issue here and what you want should be possible with a re-mortgage even if they don't cooperate. My guess is that they are now closed book for residential mortgages so won't be able to do anything that involves a change.

It's not terribly complicated, though you need a good conveyancing solicitor and a good mortgage broker. Definitely not the factory-line types as they wouldn't know what you're talking about.

You need to remortgage (new bank) the remaining plot with the split+sale to happen at completion. So at completion you're left the smaller plot and a mortgage secured on it for the remaining balance.

user1977

Also, do you have a solicitor already working on this? They should be able to guide you through the options.

(and if you don't, and you hadn't predicted this problem, you may wish to check out whether there are any other stumbling blocks!)

hlane1

Thanks Again for all your advice. We will proceed as suggested with a re mortgage etc.