Will I be refused a mortgage for buying a property with an annex
Posted on 19 February 2018 by wendy
I have accepted an offer on my house, the buyer has to get a mortgage, the bank did a survey and I was told that the buyer would almost certainly be refused a mortgage on my property. Nothing wrong with the house but we have a self contained annex with bathroom, kitchen and own front door. I was told that because it can be rented out he would be refused a mortgage- is this true? What do I need to do to it so it is no longer classed as a potential rental? The buyer has no intention of letting it, please help.
Are lenders reluctant to offer mortgages on house with annexes?
It is true that some lenders do not like properties with an annex because of the potential for unauthorised tenants to obtain rights of occupation. These rights could make it very difficult for the lender to sell the property should they ever take possession. Whether it is a problem for your buyer will depend on who they have applied to for a mortgage.
What can I do?
Depending on the size of your property and whether the annex is attached or a separate building there is very little you can do to help the situation. If it is possible you could split the title so that the annex and the main building are separate legal entities. This would also depend on whether access to both properties can be maintained either physically or by granting rights of access over a shared driveway and also on whether the utility services can be split. Alternatively you could convert the annex back into part of the main building and perhaps the easiest way of doing this would be to put in connecting internal doorways without locks.
However, you could avoid all of this if your buyer approaches the right lender and this is where a good independent mortgage broker such as John Charcol can help.
Answers provided in response to Ask the experts are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.
We recommend you seek professional advice with regard to any of these topics where appropriate.