To what extent can I alter my house without needing to notify my mortgage lender/get a different kind of mortgage?

[BuddingBuilder]

I would like to radically alter my bungalow, taking it up a storey and dividing it into two, so DS and I can live in one half and the other can be sold off as a separate home (and hopefully pay off the mortgage). I have a lump sum to pay for the work. The planners are supportive. I have a good builder lined up.

The roof will have to come off and the massive windows removed in order to take it up a storey/remodel it anyway - which I understand I can do without needing to notify my mortgage lender. The builder has said that if we could just knock down the few remaining walls and rebuild on the existing foundations, we'll end up with a much, much warmer house (it's freezing in winter), a more predictable build, and more freedom with planning the internal layout.

This is really appealing. What are my options? Can I raze it and start again? I'm guessing not, as the house is the security for the mortgage. It isn't an option for me to apply for a different kind of mortgage (such as a self-build mortgage), because (a) I don't earn enough for anyone to lend me much, and (b) my current payments are so fantastically affordable - lower than they'd be with a new mortgage. So I need to work within the confines of my existing mortgage.

What are my options? To what extent can I demolish strip the existing bungalow back to its shell without needing to change the terms of my mortgage?

well, i suppose technically if you tear it down and build two new houses you would have to have old house taken off the land register and new houses put on. Your mortgage company will be listed as a "charge" on the land register and will therefore (I think) have to grant permission or at the very least be notified. which they will not do if they think you are devaluing the property.

Perhaps your only option it think would be to not register the new property as a property - keep it as a granny annexe type thing. I supppose then you dont need to tell your mortgage company.

Thanks, HerHonesty. Hmm. The house is currently a four-bedroom bungalow. Going up a storey and splitting it would make two three-/four-bedroom houses, so not something I can pass off as a granny annexe. And I would like to be able to sell the other property, as its sale should - all being well - pay off my mortgage. The completed properties, combined, should be worth twice what the current single (worn down and character-less) property is.

If I don't tear the bungalow down and instead "modify" what I've already got - i.e. take the shallow roof off then go straight up - do I need to notify the lender in the same way?

Nothing I'm doing is dodgy. I'm just worried that if I notify the lenders of my intentions, they'll either say no (because the house will be temporarily worth less during works) or want to make more money out of me - which I can't afford. And so the project would become impossible - even though I have money to spend on the property which could massively add to its value.

Complicated!

If you have proper planning permission and the money to pay for the works, do you need to tell them? I could see that you would if you wanted to borrow extra against the property to do this.....

I have money to pay for the works (no need to borrow extra), and although I don't have planning permission yet, discussions with the planners are going well and the design is taking shape - and obviously I wouldn't start work without full planning permission. Someone else suggested the same, Portofino. I just wondered if that's sort of sneaking behind the lender's back; I mean, wouldn't most mortgage companies be unhappy if the house against which a customer's mortgage is secured is knocked down, even for a month or so?

One other option is to get the land valued as if planning permission for two dwellings were in place. It may be that the land value for two plots equals roughly what the current house is worth, in which case knocking it down wouldn't devalue the property. My mortgage would then effectively be for the plot, as opposed to the building on it. What do you reckon?

Thanks.

Anyone else have any thoughts?

Can't you just phone your mortgage provider and ask them?!

Yes just ask them! you would have to register with the land registry the two plots/properties seperately, and your mortgage co. would have an interest in both - so you couldn't sell the other plot as the new owners wouldn't get a mortgage with an interest already there, unless that mortgage would be paid off once you sold it. So you'd have to get your mortgage company to agree to transfer their interest to the one remaining plot - i.e. yours. Unless of course you'd be able to pay the mortgage off.

Whether they would agree would depend on how much your property on its own would be as a proportion of your current mortgage.

Some mortgage companies are iffy at the moment about lending to take on building work - on the basis that for a short period of time the property is worth much less. However if you can get the figures sorted out, planning permission agreed and a decent building quote, their surveyor may well agree to recommend the work goes ahead.

BUT YOU WILL HAVE TO TELL THEM!

Daisy and titchy, well, yes, I could ... but I'm concerned that, if as you say they're iffy about lending when building work's involved, they will shun the idea altogether. Which would be infuriating when the money's there to pay for the work. This is the only way DS and I can afford to stay in our home long-term, and reduced our bills, and reduce the maintenance of the house/size of the garden to look after. I'm pinning so much to this possibility - which is probably why I'm avoiding a situation where I might be told an outright "no".

But I see what you're saying: I'll have to 'fess up eventually, at the point of registering/selling the other house (which should pay off the existing mortgage), so maybe I need to cross my fingers and toes and give my lender a call.

titchy, if my lender may recommend work goes ahead if I have all my ducks in a row, do you think they might entertain a full re-build? I need to put plans in for a re-build or a remodel - I'm guessing I can't submit an either/or application!

A big thank you for your input.

unless you do the build, adn dont "sell" the other house. sit tight till you pay off the mortgage (presuming you dont need to remortgage etc) and then once the mortgage is paid off, its your land to do as you please. bit of a risk though.

I think if you had planning permission for a re-build, (and you coudl always apply for pp for that, and if turned down apply for pp for the re-modelling), and the value of the land alone, with planning permission (and don't forget land with pp is worth a lot more than land without) was equal to say 120% of the mortgage they may well agree to it as they would still have the collaterel. There's no harm asking them... Adn good luck it sounds exciting!

hello

just seen this forum and would like to know how you are doing

we are in a very similar situation as yours ( i.e would like to knock down bungalow and build bigger house or if not poss build an extension)
we have not contacted yet our mortgage lender and like you we do not need extra funds but are weary of the reaction of the lender about knocking down existing property even if it would result in a property with much higher value.

any advice?
thanks