Which Lenders will give me a mortgage if I want to buy the house next door property and rent it out.
I get a surprisingly high number of mortgage enquiries relating to the purchase of buy-to-let properties that are next door to one already owned by the Landlord. So if your looking at Buying the house next door and getting a mortgage this article is worth a read.
There are normally a variety of drivers the most common are the geographic simplicity presents to manage the properties, and prior knowledge of the reliability of rent.
To the untrained eye obtaining a mortgage on a house should be straight-forward however if it is on a property that is next door this adds to the complexity of the transaction. Why? Well Residential Mortgage Lenders are generally a nervous bunch and their Underwriters can be guilty of large imaginations.
For them the collateral they are lending against (i.e. the property) is central to their decision making so they want to fully understand the applicants’ intensions for its configuration and would-be concerned that the Landlord would knock through the walls and blur their security. To clarify their reasoning further: you own two properties with two separate mortgages, and convert the property into one, should you default on the payments how can the Lender take back possession?
This of course could be the idea of the Landlord, but in my experience is rarely the case, and if that was the plan we direct them towards commercial Lenders rather the traditional residential ones. This article concentrates on the properties remaining separate, so read on to find out more.
Buy to lets next door
Some of the prominent mortgage banks such as Santander and Metro simply do not lend on properties next door if the property is adjoining for fear of a ‘knock-through’. Their stance softens if the property is next door but there is clear daylight between the one they are own and intend to purchase i.e. detached or semi-detached on the near side. Accord the specialist buy to let division of the UK’s second largest building society Yorkshire Building Society, takes a similar view on properties next door.
Natwest and Post Office take a guarded approach when determining whether to lend on properties next door. They push the onus onto the surveyors they instruct to pass the betterment of their judgement. This muddies the water and can cost the applicant abortive money if based on the surveyors’ hunches they decide not to lend.
To further complicate matters Lenders may also look at overall exposure in the vicinity. For instance,
Godiva, the specialist buy to let arm of Coventry Building Society only want 10% of the street to be mortgaged to them.
As you can see this can fast become a minefield. Therefore if you want expert advice on the matter please call me directly armed with your plans and postcode. T: 020 7993 2044 or complete the online enquiry form on this page.
Author: Payam Azadi
Payam Azadi is a partner at Niche Advice who are whole of the market Independent Mortgage Brokers. His role is very much focused on Property financing both on residential and commercial lines. To get in contact with him please click here.
