When to mortgage

[MortarThePoint]

We're building a house behind an pre-existing house that we are currently living in. So far we haven't needed a mortgage, but will ultimately. We could get to habitable and BC signoff without a mortgage but I would rather have a 'standard' mortgage sooner than later as rates likely to rise and feeling the pinch. Options:

    A) Mortgage just the pre-existing house, but lender could get sniffy about the building site out back, though there is a very natural divide between the two  with >0.5 acre for the pre-existing (but shared drive).

    B) Mortgage against just the new house.

    C) Mortgage against both, may still be sniffy about building site but clearly the value is higher

 

The deed currently covers both 'sites'. I could get a solicitor to split but timing of that may be critical in terms of capital gains tax. I guess a loan is against a deed so (A) and (B) would need the deed splitting (?).

 

If (B), when is it finished in the eyes of a lender:

1. When I say it is by virtue of having a working kitchen and loo
2. When the BC says it is habitable by way of a letter
3. Completion certificate without signed off planning conditions
4. Completion certificate with all planning conditions signed off
5. Depends on loan to value ratio (LTV)

[Bozza]

I think standard residential mortgage providers would likely get the eebee jeebees regarding offering a mortgage in such circumstances. Have you had a chat with Ecology BS?    There is a reason their rates are higher as they offer products in more unusual / bespoke  circumstances.

 

I’m with them and happy to pay the higher rate for the flexibility offered/service provided.  In the near future I’ll switch to a standard mortgage when I don’t need that flexibility.  
 

I don’t think interest rates are likely to rocket like in the 80s,, though may increase a tiny bit, as the economy and inflation, post pandemic, returns to some degree of normality.  Pandemic & Brexit are relatively temporary things not an inherent problem with the economy.  Just my opinion.    
 

will be interesting to see what solution you find for your circumstances.

 

 

[Mr Punter]

If the current house will provide you with enough funds, get a mortgage on it now.  Mention that part of it is a building plot and you would like their confirmation that they will grant consent to transfer this at a later date.  I have just mortgaged at 0.94% fixed for 5 years.  Fees were £1000 but valuation and legals were included.

 

The way to have 2 titles is by transfer of part to another party.  You cannot transfer to yourself.

 

Is there ANY way you could have separate drives?

[MortarThePoint]

2 hours ago, Mr Punter said:

If the current house will provide you with enough funds, get a mortgage on it now.  Mention that part of it is a building plot and you would like their confirmation that they will grant consent to transfer this at a later date.  I have just mortgaged at 0.94% fixed for 5 years.  Fees were £1000 but valuation and legals were included.

 

The way to have 2 titles is by transfer of part to another party.  You cannot transfer to yourself.

 

Is there ANY way you could have separate drives?

 

That's a good deal, well done!

 

A mortgage on the current house would help.

 

The rear house also has access via a 'farm track' which belongs to it, so whilst the shared drive is the preferred route it's not the only.