Buying a divided house with 2 mortgages?

[Eastwiththem]

We have been house hunting nearly a year, including 6 months waiting for a seller to exchange who eventually decided not to move . It's the usual problem that the houses we can afford in the right area are too small, but the big houses in our price range are in the wrong areas.

I've just spotted a house in the right area, but it's £250k over budget. However, it's currently arranged as two flats, with a main flat on the ground and first floor and a 2 bed basement flat. They both have their own access and there is no internal connection as the staircase has been removed. If you took out the cost of a basement flat (£250-300k)in that area then the upper flat is in our budget.

Is it possible to buy the upper flat on a residential mortgage and BTL the basement flat when it's being sold as one unit? The plan would be to let out the basement for 5-10 years and then remortgage so we owned the whole property as our residence, as we need the space but not urgently (tiny toddlers growing in to hulking teenagers, plus DH and I work from home so could do with a proper office).

I imagine it would be pretty complex to arrange but are mortgage brokers going to laugh us out the office? Is this a crazy plan dreamt up after far too many hours on rightmove or could it be a possibility?

A friend of ours tried something similar and was outright refused a BTL on the second property as the lender believed they would immediately knock through therefore not let it out.

They were told no lender would entertain a BTL on an immediately neighbouring property- don't know how true that is though.

I can see why lenders would be suspicious of that, but I guess that's part of the lending contract so it wouldn't be in the borrower's interest to breach the contract. There's also no way we could afford the repayments without the rental income so it wouldn't even be an option to do it sneakily in our case!

A friend of mine has just bought their adjoining house on a BTL mortgage so some places will do it.

That's interesting who.

If the house is being marketed as one property you need to establish what is on the deeds.

If it is one property on there and also classed as one property for council tax and utilities I suspect splitting it will be more trouble than it's worth. Likewise if it had been easy to sell as 2 properties I suspect the vendor would have done so as 2 flats are likely to be worth more than one house.

I think you would need a semi commercial mortgage, similar to products for mixed use to allow you to let out part of the building and live in the remainder

so you need a mortgage broker as a high street lender will be unlikely to lend on this basis

you may need as much as 25-40% equity so more than a residential mortgage

Thanks all. It's definitely being sold as one house, and I suspect the basement flat is a little bit "unofficial" despite being completely separated from the upper floors. We used a broker for our previous mortgages so might test the waters with them and see what they think. Our deposit is pretty healthy so a smaller LTV ratio wouldn't be a major hurdle.