Mortgage on parking space

NL1978

Hi we own an apartment with a private covered parking space. As its quite an expensive area we are looking to sell our space as its not needed, so we can clear some debt. My question relates to the mortgage as we have a mortgage for 420k. Property value is 650 and parking space 50k. If we sell the space as we have a mortgage will the lender want the capital paid off or do the sale proceeds come to us? Thanks 

Scorpio33

It depends on if you have a seperate mortgage for the parking space or not.

If you have a seperate one for the parking space, they would want the capital paid off. They have lent you money (mortgage) in exchange for assurity that if you don't pay that money back, they can take back the underlying asset (the parking space). So if you no longer own the parking space, they would expect the mortgage on that space paid off in full as you no longer own it.

If it is just a general mortgage on the property as a whole, it may impact on the total value of the house, which will impact on your loan to value (LTV) which will requirements will be detailed in your mortgage offer.

MWT

NL1978 said:

Hi we own an apartment with a private covered parking space. As its quite an expensive area we are looking to sell our space as its not needed, so we can clear some debt. My question relates to the mortgage as we have a mortgage for 420k. Property value is 650 and parking space 50k. If we sell the space as we have a mortgage will the lender want the capital paid off or do the sale proceeds come to us? Thanks 

If the space was included in the property under the mortgage then you will not be able to dispose of the parking space without your lenders approval, so I'd start there and see if they are willing to let you sell it off...

If not then you are looking at a remortgage...

ACG

The lender would need to send out a surveyor to see what they would value it at without the parking spot. 
They might want all/some/none of the £50k. You would only know by speaking to them and starting the process. 

As a side thought, could you rent it out? That would help you to pay down the debt and retain the parking space should you need it down the line or sell up completely it will add value/desirability. 

NL1978

Yes the space was included in the mortgage. The lender is doing a survey to establish value excluding the parking space. I had assumed that as long as there was still sufficient equity in the property that we could withdraw the funds from the sale of cp space but I'm guessing as they have first charge they could ask for the sale proceeds. We would likely end up with a property value of 600k and mortgage of 420k which won't adjust the ltv enough to impact ltv and rate 

NL1978

ACG said:

The lender would need to send out a surveyor to see what they would value it at without the parking spot. 
They might want all/some/none of the £50k. You would only know by speaking to them and starting the process. 

As a side thought, could you rent it out? That would help you to pay down the debt and retain the parking space should you need it down the line or sell up completely it will add value/desirability. 

We had considered renting it out but ideally need to free up a lump sum of capital 

user1977

I wouldn't expect the lender to require you to repay any capital if you're still well within the LTV ratio.

waveneygnome

Try and think longer term - regardless of the mortgage issue - would selling the parking spot limit the number of potential buyers if/when you come to sell the flat in the future?

I'm certain many people would not even consider a property if there was inadequate parking.

Could you look at it another way..........how much rent could you get from the parking space?  Could you look at taking out a personal loan (giving you the lump sum), and repay the loan from the parking rent?  You might not get to you £50k, but 20/30k possibly?  If the parking rent was £400 per month.........you should be able to get £20k.