Can I Sell Part of My Land if It Is Mortgaged?

Yes, it's possible to sell part of your land even if you have a mortgage, but there are some important considerations to keep in mind:

1. Consent from the Mortgage Lender
   • Before proceeding with the sale of part of your land, you'll need to obtain consent from your mortgage lender. Since the lender has a legal interest in the property as security for the mortgage loan, they have a say in any transactions involving the property
   • You'll need to inform the lender of your intention to sell part of the land and obtain their approval before proceeding
   • Whether they grant consent is going to depend on the value of the security remaining after the proposed sale. If there is still sufficient equity to support your mortgage you should get consent. If there isn't, you may still get consent subject to repaying some of your mortgage from the sale proceeds
   • Lender consent may also depend on your intention with the land you’re selling. Is it likely to be built on? Do you want to sell it for residential or commercial purposes?
2. Impact on the Mortgage
   • Selling a piece of your land may affect your mortgage arrangement, depending on the terms of your mortgage agreement and the lender's policies. The lender may require you to use a portion of the proceeds from the sale to reduce the outstanding mortgage balance or adjust the terms of the mortgage loan accordingly
3. Property Valuation
   • The lender may require a valuation of the property to assess the impact of the land sale on the overall value of the property and the lender's security interest. The valuation will help determine how the proceeds from the land sale will be allocated and whether any adjustments to the mortgage terms are necessary
4. Legal Considerations
   • It's essential to consult with legal professionals, such as solicitors or conveyancers, to ensure that the land sale is conducted in compliance with legal requirements and does not breach any terms of your mortgage agreement. They can help you navigate the legal aspects of the transaction, including splitting the title deeds of the property and land you want to sell, drafting contracts, obtaining necessary approvals and registering the sale with the relevant authorities. You may also want to ask your solicitor about getting planning permission on the land as this will increase the value and enable you to earn more from the sale
5. Impact on Property Use
   • Selling part of your land may have implications for the use and enjoyment of the remaining land. Consider how the sale will affect access, utilities, zoning regulations, and any existing structures or improvements on the property. It's advisable to conduct thorough due diligence and consider the long term implications of the land sale before proceeding.

Overall, while it's possible to sell part of your land while it’s mortgaged, it's essential to obtain consent from your mortgage lender and seek professional advice to ensure that the transaction is conducted properly and does not negatively impact your mortgage arrangement or legal rights.

It's essential to explore all available options and seek professional advice from a mortgage broker like John Charcol, we have experience in providing solutions for clients. We can help you navigate the process, identify potential solutions, and find the best financing option for your specific circumstances.