Mortgage with an Enduring Power of Attorney
Posted on 6 February 2009
Hi
My wife has enduring power of atourney for her mum. Her mum has been moved from her property to a sheltered home as she is suffering alzhimers. Now, the property is a commercial dwelling with a shop and above flat. It has a mortgage of £25000 outstanding. Can she remortgage the property on a buy to let basis to clear the mortgage and rent it out to fund her mums care?
Most lenders will not accept an application where an enduring power of attorney (EPA) is involved. I think this is primarily because they don’t consider it worthwhile setting up a system to deal with such cases. The problem is worse now that many lenders have an online application system because they are even less likely to consider it worthwhile going to the expense of programming their system to be able to cope with what is likely to be a very small number of applications.
In any case as the property consists of a shop and flat above a Buy to Let (BTL) mortgage would not be suitable, assuming the property is on one title. You would either need a commercial mortgage or it may be worth splitting the title so that the shop and flat have separate titles, each with their own lease. This would incur some legal costs and there may be some tax implications and so if you want to consider this you should get specialist legal advice. Purely from the mortgage perspective it may be helpful because a BTL mortgage on just the flat would then be the right type of mortgage.
However, many lenders will not lend on a flat above a shop, depending on what type of shop it is, and this plus the problems because of the EPA, will make it difficult to find a lender. If the only reason a lender declines the application is because of the EPA you may have a case for arguing this contravenes the discrimination legislation but I would first of all try your wife’s and/or your mother’s bank.
Categories: Buy-to-let, Commercial, Remortgaging, Special circumstances
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