Mortgage To Buy Next Door To Knock Through
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Mortgage To Buy Next Door To Knock Through
Scott explains the process of getting a mortgage to buy the property next door and knock through to create a single, bigger home.Can I buy two houses next to each other and combine them into one?
Yes. You absolutely can. There are a lot of caveats to consider but it can be done.
The right option is probably to buy two terraced or semi-detached houses that are adjoined. We have had an enquiry to buy two detached houses and join them together, and it can still be done as long as the titles are adjacent.
Do many lenders offer this? Why is it a challenge to buy an adjoining property?
The problems lie in how you structure the initial purchase of the adjacent property – or, if you’re buying both at the same time, how you structure that purchase.
For example, if you live in house number one and have a mortgage on it, and you want to buy number two next door, a lot of lenders won’t allow that. They don’t like the idea that you might knock through – which is in this case exactly the intent.
The mortgage you’re on won’t allow for that heavy refurbishment. You would have to take yourself off that mortgage and find a bridging loan, buy the adjacent property, do all the works and then exit back onto a normal mortgage.
Again, this happens with Buy to Lets. If landlords own two or three adjacent terraced properties, lenders become nervous because they think you will knock through the middle, not tell them and have a very large Buy to Let or HMO and they won’t know about it.
But it can be done. You find two houses next to each other, and if you want to knock through, we need to move over to a bridging loan to do those works.
Do you need planning permission to knock two houses into one?
Planning will depend on your local council, so always speak to them in advance for some pre-planning approval. Most cases will probably need something.
You will certainly need an architect and builders, because those walls between the houses are probably supporting walls, so don’t start knocking them through without professional advice.
Are there any restrictions to buying the home next door to knock through?
If the property next door has become available and you want to knock it through at some point in the future, you might find restrictions with the mortgages available to you.
As previously mentioned, lenders don’t want you knocking through while you’re on their mortgage product. So speak to your broker and explain that you do intend to do those works in the future, but not now. We can speak to lenders, present the case correctly, and overcome any hurdles you might have.
How do I get a mortgage to buy the house next door and expand my home?
Bridging loans are pretty much the only option. If you have a residential mortgage or a Buy to Let mortgage on the property you currently own, lenders won’t want you to do heavy refurbishment while their product is active. It impacts their ability to sell it, if you default on the loan and they have to repossess.
Speak to your broker for advice on how to do that. If you’re living in the property, it’ll be a regulated mortgage. In that case you will have a regulated bridging loan to purchase next door and cover off your existing mortgage balance. You would complete the works and then we’ll put you back onto an appropriate mortgage at the end.
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Is it a good idea to buy a house next door? Is it better to just buy a bigger house instead?
It really depends on your circumstances. There are pros and cons for both options. Buying a bigger house might be the better option overall, because you have a house that’s purpose built, probably on slightly more land, for the same price.
Buying two houses and knocking through can mean complicated structures. Those two houses were intended to be separate houses. The front doors are separate, the back doors are separate, the bathrooms and plumbing is already there. If you knock through, you still have two front doors. You have to close one up and have a house that isn’t symmetrical.
It’s typically very difficult to have a mortgage on a house with two kitchens, so you’ll want to give it one kitchen. There will be two staircases. Lots of things won’t make sense, so you will need a really good architect to make sure the space is properly laid out, and a lot of work to make it livable. You may also need planning permission.
There’s obviously a lot of cost involved and you’re unlikely to significantly add value to that house because there won’t be anything similar in the immediate area. So you’re very unlikely to get that money back.
Obviously the pros can be that you end up living in the area that you want to live in. If you don’t want to move and it’s a perfect location, it can be a good option. So it really depends on your circumstances and your goals.
What costs are involved?
If you need to put a planning application in, there’s some cost to that. It’s only a few thousand pounds, but it is a cost to consider. You will need to switch your existing mortgage to a bridging loan, and there may be penalties involved with ending your existing mortgage.
The bridging loan obviously has its own set of fees and new valuations, and at the end of that, there will be fees and valuations to set up a new Buy to Let or residential mortgage. You’d end up stacking up several rounds of fees.
You’re obviously going to need an architect to do all the plans to move the walls around, make sure everything looks sensible and it’s a livable space afterwards. Then you need a builder to do all this work for you. There will be quite a few costs to consider.
It obviously can be really worth it if you end up with the perfect living environment, but there are a lot of costs in the middle and you will go through a couple of mortgage changes to get there.
How can a broker help me buy two houses to knock through?
We can definitely help in all areas of this for this kind of transaction. Firstly, in giving you advice on if it is a good idea, the lender choices, location, values, etc.
We can give you some guidance on which bridging loan will be right to replace your existing residential or Buy to Let mortgage. A lot of work we do with bridging loans, if you’ve heard the other podcasts, is negotiating the terms for you to make sure it’s cost effective.
We also ensure the exit strategy is in place. We’ll either get a Buy to Let or residential mortgage lined up and ready to go, so that you’re not sat on the bridging loan. These can be quite expensive so you don’t want to keep them longer than necessary. We really aim to minimise those costs.
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
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