Amalgamate 2 house

Anapink

I wondered if anyone had any advise, I am purchasing my neighbours house, we have had a remortgage application accepted in our current property to release the funds to but next door outright. However it now seems that the lender will not give funds is the intention is to amalgamate the houses. We are not going to amalgamate the houses immediately because we want to renovate next door first, also to amalgamate the house all that is needed in our property is to open a couple of doors as this used to be one dwelling back in the day, anyone has done this and has any advise on securing funding? 

user1977

If you need a loan during the amalgamation works I think you need to remortgage to specialist development funding before you start, any "normal" mortgage lender won't want to risk repossessing (half of!) a building site.

I presume you have already checked out any consents required (planning, building regulations, title conditions etc)?

Anapink

Hi user1977, at the moment I only need the lender to purchase the property, I have the funds to do the works in the adjacent property, when we are ready to merge we would then ask the lender for authorisation.  

user1977

Anapink said:

Hi user1977, at the moment I only need the lender to purchase the property, I have the funds to do the works in the adjacent property, when we are ready to merge we would then ask the lender for authorisation.  

The lender isn't going to give authorisation though. You will need to move to a different lender before you start the works. And given they know your plans, they may be nervous about you "forgetting" to do that, so you may find other lenders similarly reluctant to help you with the purchase.

grumpy_codger

user1977 said:

If you need a loan during the amalgamation works I think you need to remortgage to specialist development funding before you start, any "normal" mortgage lender won't want to risk repossessing (half of!) a building site.
...

It's common for normal lenders to risk reposessing a full building site when mortgaged houses undergo extensions and conversions. My friend had to move out for several months because the house was unlivable. He told me that his lender (HSBC) didn't mind.

In the OP's case it's just couple of new doors and some minor imporvements. I guess that the main reason is that the value of the new 'amalgamated' house is likely to be smaller that the total value of two original houses.

user1977

grumpy_codger said:

user1977 said:

If you need a loan during the amalgamation works I think you need to remortgage to specialist development funding before you start, any "normal" mortgage lender won't want to risk repossessing (half of!) a building site.
...

It's common for normal lenders to risk reposessing a full building site when mortgaged houses undergo extensions and conversions.

Yes, but the added problem here is that their existing charge only covers one house, so that's all they could sell if they did repossess. It is, of course, up to the lender, but I would fully expect them to say no.

Anapink

We have a lot of equity in our house and no works are required at all in our property to join them apart from opening the 2 old doors (this would cost £900), we would not be able to join these without the mortgage company approval as this is a legal requirement, so its not really something you can forget to do. I think the fact that the houses together are worth less doesn't apply here really because we are only remortaging one and surely together they would be worth more than the house is at the moment. 

user1977

I think you're still missing the point that their charge is only over one half of the property? So they repossess, and all they can sell is your "existing" house, which will now have door(ways) leading straight through to the neighbours (i.e. you!). Who's going to buy that?

Anapink

Thanks everyone for the helpful advice