Purchased with cash unregistered property WITH title deeds. Can I get a mortgage whilst unregistered

juicybiscuit

Recently completed on a cash purchase of house. It had not been registered at LR since it's construction in 1957. Deeds/strong root of title/eptimone of title was established during the conveyancing process so there was no issue there. Subsequently house purchase went through and an application for first registration was/is currently being submitted to the LR.

We are planning to do substantial work on the house and once plans are complete will need to get a mortgage to fund the re-build. Given there are very long delays with new property registrations at the LR would we have to wait for the property to be registered in our name, or would we be able to get a mortgage before this happens?

Very confused as to how this works. I was under the impression that a lender would have lent on the house even if unregistered provided proof of title was in evidence. The offer of a mortgage would then have triggered a first registration at LR upon completion. But given we now own the property outright yet registration is not in our name/unregistered, does the same sort of process still apply? I.E. they'd lend to us? Bit lost. Really hoping we don't have a lengthy and costly wait before we can get a mortgage.

Thanks in advance.

justwhat

We purchased a house with same issue. mortgage went through fine. (scotland) register of sasines to LR

user1977

justwhat said:

We purchased a house with same issue. mortgage went through fine. (scotland) register of sasines to LR

It seems a bit more normal in Scotland for solicitors to be happy dealing with titles which are in the process of registration - in England the habit appears to be for solicitors to want the previous registration application to be complete before they bother looking at it. It can however be expedited by the Land Registry.

Two more relevant questions for the OP though:

1. how long ago is "recently"? Lenders tend not to like lending where you've bought less than six months previously.

2. What does the "rebuild" comprise? Lenders don't like the risk of repossessing an uninhabitable building site.

juicybiscuit

justwhat said:

We purchased a house with same issue. mortgage went through fine. (scotland) register of sasines to LR

Would you care to elaborate? Was it a mortgage application post cash purchase during the normal conveyancing process? It’s more the former that I can’t get my head around having struggled to find much info online. 

juicybiscuit

user1977 said:

justwhat said:

We purchased a house with same issue. mortgage went through fine. (scotland) register of sasines to LR

It seems a bit more normal in Scotland for solicitors to be happy dealing with titles which are in the process of registration - in England the habit appears to be for solicitors to want the previous registration application to be complete before they bother looking at it. It can however be expedited by the Land Registry.

Two more relevant questions for the OP though:

1. how long ago is "recently"? Lenders tend not to like lending where you've bought less than six months previously.

2. What does the "rebuild" comprise? Lenders don't like the risk of repossessing an uninhabitable building site.

Recently is a fortnight ago but will take months of planning. No, we wouldn’t apply for mortgage until ready and would do so on a fully functioning and habitable house. Thats not an issue. 

As far as I can tell it wouldn’t be an issue to get a mortgage on the house despite it being unregistered provided deeds/title is established at the conveyancing stage. It’s more that it’s post purchase - would the same apply or because the conveyancing process is now complete, and house yet to be registered, something different applies?

propertyrental

Speak to a mortgage broker.

You might need a specialist mortgage depending on the type of work involved and whether you'll be living there during the work.

But in principle it should be possible.

juicybiscuit

Thanks. Let's put to one side the work involved etc. That's not the point of this thread, thank you.

It's more to do with whether a bank will loan funds on an unregistered property (I believe no problem during conveyancing process, as this is one of the triggers for compulsory registration). It's more whether this remains the case when outside the conveyancing process i.e. house already 'sold' but yet to be registered.

I found the following online talking about having the correct plans and documents upon purchasing a property:

"The conveyancer will need to ensure that a good root of title is available to you and the lender. If this cannot be produced, the lender will not be willing to provide you with a mortgage to fund the purchase."

So, assuming I have good root of title (I do) then would it matter to a lender if the house is not fully registered at the land registry to approve and release funds..... ? Clear as mud. 

user1977

The lender won't care, they just need the title signed off. The trouble as I alluded above is one of conveyancing practice, particularly at the cheap-and-cheerful remortgage conveyancing end of the market, as they are likely to be reluctant to spend the time dealing with a still-being-registered title and would prefer to wait until the Land Registry have finished the job. As I said above, you can ask for the registration to be expedited.

juicybiscuit

Thanks for the input. Very much appreciated. Think I'm getting my head around it slowly and I think I'll be OK but need to dive a bit deeper for sure and get some solid confirmation. Thanks again

kingstreet

I suspect you will not be able to complete a remortgage until the first registration is finalised. We had issues with a couple of newbuild flats which remained unregistered two years after the purchases had been completed.

As user1977 has said, be careful if you try to do this in the first six months of ownership as many lenders won't lend in such circumstances.

Finally, you may also wish to consider if your property will be treated as a newbuild by lenders. Some do if the property was empty during a period of renovation/modernisation. This would create the requirement for a warranty or Architect's Certificate.

juicybiscuit

Thanks Kingstreet.

"Your first registration application will take at least 13 months to process. According to the Land Registry official guidance, almost all applications are handled in 14 months, with the exception of more complex cases, which could take longer.

Until the Land Registry first registration is completed, the seller remains the legal owner as the the property transfer only takes place on registration. This means that the seller holds the property on trust for the buyer until the property register is updated, but your transaction is protection from the moment of application."

This is the bit that gives me some sort of hope, but not sure how/if it applies to us given the conveyancing process is now complete and we own the property outright.... I would assume it does but no idea...