Possible repossession if two properties become one?

[birdie1971]

I own a semi detached property (no mortgage � it's all mine!) and next door has put their house up for sale. I'm thinking of buying it and doing some substantial renovation work to make the two properties into one, so I'll have a nice big house. However, I was thinking � if I did this and then defaulted on the mortgage on the second property, would the mortgage lender be able to repossess the entire property, even though I effectively own 50% outright?

[Ethel]

Yes.

You can own your home outright, take out loans - it doesn't matter whether they are secured against your property or not - and if you default your property can be 'repossessed'.

[spacechimp]

This shouldn't be a problem though, just don't default.

[erimus1]

The lender may well not allow you to complete the works to combine both properties.
Regards,
Steve

[birdie1971]

Thanks for the replies. However, the question was specific in that I was asking whether a mortgage lender is legally entitled to repossess a property that they don�t wholly own. To clarify, I own my house entirely. Is it possible that a mortgage lender could repossess the entire connected house even though they don�t have any legal rights to my original �semi detached� house? Also, I don�t intend to default on the payments, but nobody knows what�s going to happen in the future do they?

[lady_p_gold]

The way I see it is ... at the moment it is two separate properties. Your neighbour's house could be repossessed if they defaulted but yours would remain untouched of course because you are a totally separate person. However if you bought their house as a separate house then the mortgage would apply just to that house and could be repossessed like any other. However, if you then bought next door and changed the title so that it was all one property then the mortage would then apply to all of it and therefore the whole property could be repossessed as you have changed it into one thing. So I think it would all depend on whether you merged the one property into a single dwelling or kept it as two. I think it would make good financial sense to buy it, you could even rent it out and keep an eye on it and make a nice income, or have a nice big house as you say. I wish I could afford to buy my next door !

[Oneeyedvic]

To answer your specific question, no they could not repossess the second half of your 'new' house.

However, they could repossess part of it (which they havea charge over) and instruct builders to convert it back to one dwelling.

It is also worth noting that I have done this on a commercial scale and the finance company who financed the second building took a second charge over the first buihding.They needed permission to tkae a second charge and when they told the first charge holders the reason, the first charge holders on the first property demanded a second charge on the second property as well.

Hope his makes sense. To try and clarify - whilst in your example only part of the building could be repossessed, your example is unlikely to happen - they will want a charge over both parts.


*Note where I put the word charge you can replace this with the word mortgage. if that is easier.

[birdie1971]

Thanks for all the replies and advice. It's certainly given me something to think about!

Cheers

[themas]

Perhaps you should check carefully the terms of any mortgage you propose to take out on the house you will be buying. It may be that these terms require you to notify the lender (& get their approval) before you do anything so drastic as converting the house into part of a larger property.

[Hgrove]

They can force you to sell up and they can help themselves to enough of the money to pay themselves back for the loan and all various admin/legal costs run up in getting you to sell (via a court order that is). These costs can be so high that in practice you could end up with precious little.