Splitting house and selling part of it

steel-jaw-sasha

Hi I am in the process of Splitting my house and selling part of it. I will continue to live in the remaining part.

I have planning, a new address, services are getting installed in the new year.

My question is reguarding the mortgage and land registry, I have talked to my mortgage provider, who were very unhelful! I have approached a solicitor who said nothing can be done until the properties are split.

So when do I change the land registry to show the split, and when I do this will it not effect the mortgage deeds?

Flugelhorn

I would have thought your mortgage provider would have had something to say about it as I presume they have an interest in the whole house, including the bit that you are planning to sell off? Just thinking that they loaned on your house being of a certain size / value and now it is going to be smaller ? worth less? 

Can imagine less of an issue if there is the mortgage is low 

silvercar

Do you have planning permission? Building regs sign off?

user1977

Bit late to be thinking about this sort of thing! I expect your lender will not consent to whatever construction work is required, so you'd need to remortgage to some sort of development finance in order to do the work in the first place. On completion of a sale, it's (normally) the buyer's application for registration which has the effect of splitting the title. If you still needed the same secured loan over the remainder of the property then either the lender grants a partial release of their charge (if they are willing to) or you remortgage to a residential mortgage for your remaining property.

I would seek advice from a (more helpful) solicitor first though.

steel-jaw-sasha

silvercar said:

Do you have planning permission? Building regs sign off?

yes, I have mentioned that

Flugelhorn

What have you asked the mortgage provider to do? is it to get permission to do this?

steel-jaw-sasha

Flugelhorn said:

What have you asked the mortgage provider to do? is it to get permission to do this?

Yes, explaned everything in detail to them,

silvercar

The up front way of doing this is to seek consent from the lender and agree the mortgage being moved to the part you will remain with. The lender may want valuations of the likely values once the work is completed, they may only be prepared to lend a smaller amount and require you to repay some of the mortgage on sale of the new half property especially if your remaining home is worth less than the original (as the LTV will be lower).

Less up front ways, including redeeming this mortgage by re-mortgaging your new home with a different lender, would get round the consent issue but probably breach the original mortgage t&cs.

eddddy

I assume you have a residential mortgage.

• Splitting a house into 2 would be considered development.  It's extremely unlikely that a lender would consent to you doing that while you have a residential mortgage.

• If you've told your lender you've already started doing it, I'm not sure what action they might take - for example, tell you to stop, threaten to demand that you repay your mortgage, etc.

I guess somebody who didn't care about breaking their residential mortgage t&cs might have approached it like this:

• Split the house into 2 without telling their mortgage lender

• Put one of the houses up for sale

• Apply for a mortgage on the remaining house (with a different lender)

•  Then on completion day - do all the following:
• - Redeem the original mortgage on the original house with the original lender
• - Sell one of the new houses (by splitting the title and transferring part of it)
• - Take out the new mortgage with the new lender on the other new house (to live in)

But it could get 'unpleasant' if the original mortgage lender finds out what's going on.

And a new mortgage lender might be nervous about lending on a newly converted house, with no warranty, that has presumably been converted by an 'amateur developer' with no track record in development.