This is because a potential buyer of the freehold will likely want a separate lease on each flat, as it would give them some flexibility if they were to sell any in the future. One main drawback of roll-up interest is that the amount you owe – and will have to pay back – increases by a bit more each time the interest is added. However, you can indirectly own the freehold through a limited company, and own the lease on your flat directly. A strong partnership with a good estate agent is the best approach to attract quality tenants and meet the needs of your future residents. You may not need to remortgage if you intend on selling the flats after the work is finished, as long as you discuss your exit strategy with the development/bridging loan lender before you take out the loan. Understand all of your options, no matter how complex. All leases will need to adhere to the Council of Mortgage Lenders instructions for … We will be happy to offer our expertise to help you get the ball rolling. The property: A four-bedroom, Victorian mid-terrace house; The location: Battersea, south-west London; What they spent: The couple bought the original property as two flats for £950,000 in 2011, and have spent around £250,000 on renovation work and on converting them into a single house. You will need a residential mortgage for the leasehold you plan on living in. Converting a house into flats without the lender’s permission will put you in breach of the terms of your mortgage which would potentially give the lender the right to take possession of the property. Registered office address for John Charcol Limited is St. Helen's, 1 Undershaft, London, EC3P 3DQ. Calls may be recorded for training and monitoring. You will only qualify for a specialist buy-to-let mortgage if you intend to rent out all the flats once the conversion is complete. Time. This depends on what you intend to do with the property afterwards. A buy-to-let remortgage would likely be cheaper than development finance or a bridging loan. As with development finance, a bridging loan is a short-term solution and you will have to remortgage or sell once the work is complete. It’s worth noting that you won’t be able to sell any of the flats without putting individual leases on them first. Personally leave the house as is , and just share a suitable house with your father. Another factor that may play a part is the availability of parking. (although not a complete full conversion as we still only want one mortgage, one deeds and one set of bills.) One main benefit of roll-up interest is that you don’t have to worry about paying off any interest until the work is completed and you remortgage or sell the property. The costs involved with this work will vary greatly from one property to the next. I live in a converted Victorian house split into 6 units of which I have a mortgage on one unit/flat. In order to gain any finance for the conversion, a lender will want to see that you have planning permission. What are my options, as I would need to borrow further money to do the work? So the plan would be to convert the house into 3 self contained flats. They’re short-term solutions, between 12 - 24 months. You need to gain your lender’s consent before commencing any work to convert a house into flats. In this arrangement, a lender will allow you to borrow up to 65% of the property’s value. They come with high interest rates as they’re very short-term – up to 12 months. Turn your property into a worthwhile investment. Some lenders do not like the fact they have mortgages on several flats in the same building. Change your mortgage deal for your current property. It’s likely you’ll ultimately need to remortgage onto a new product - or products -  if you want to convert a house into 2 or more flats. Once complete, the flats are sold for £250,000 each. The reason is that any prospective buyer of the freehold may want to take out a separate lease on each flat to give them flexibility for selling later on. All Time Today Last Week Last Month. Search. Thread starter steverogers84; Start date ... My brother and I are looking to buy a terraced house in Cardiff and splitting it into flats to sell on and make good profits hopefully. You’d need to remortgage again once the work was complete, unless you intended on selling the flats straight away. Your estate agent can assist in determining where changes can be made, including where new boilers and heating systems need to be installed. You’ve made the decision to convert the home in which you live, in other words, your primary residence, to a rental house. I have recently started thinking about buying a house to convert into flats solely for resale purposes. Privacy Policy / Cookie Policy One for my mother, me and one rented. Introduction – The purchase of buildings for conversion in to self contained flats is becoming more popular. It may be possible to retain the freehold for the entire property by obtaining a specialist buy-to-let mortgage. Find loads of useful information to support you on your property-buying journey. Splitting a house into flats allows you to sell each of the flats individually or to have a group of rental properties all under one roof. Converting houses into flats, unless you get the house as a derelict shell for cheap money, does not make finacial sense. There’s a high demand for flats in London, and splitting a property into units can maximise both rental income in … The Financial Services Register number is 665649. You would then rent out each flat individually while remaining the freeholder. 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