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Getting a Mortgage on a Property That Has an Annexe

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Elderly lady with zimmer frame walking past Hudson Rose office in CirencesterMultigenerational living is all the rage these days. Lots of people are keen to join forces with family members in order to benefit from a larger property, and/or moving in a family member can make it easier to look after them as they get older.  Of course, an annexe can also be appealing as a potential source of income. But what does it all mean in terms of mortgages?

 

Well to start with, let’s go back to basics…

 

 

 

What is an annexe?

An annexe is an outbuilding which is associated with the main home. Sometimes it is physically joined on to the main property, other times there is a degree of separation. An annexe will usually contain some living accommodation, a small kitchen and a bedroom and bathroom. It offers the occupier a degree of independent living, since they have their own space while still being close by. This has made annexes a great choice for those wanting to accommodate elderly parents, grown up children or to provide guest accommodation. Some people choose to rent out their annexe on sites like Airbnb to gain some extra income.

 

Why can it be problematic?

Once an annexe is added, the property may then be considered as mixed use residential and commercial. A residential mortgage is the standard mortgage that is used for people’s main place of residence, ie on the home that you intend to live in. A commercial or ‘buy-to-let’ mortgage is used for properties that you intend to rent out, either short term or long term, to someone else. For example, your house may remain as your main home but the annexe is let out to paying tenants. In cases like this, the two separate uses require different types of mortgages- a residential mortgage AND a commercial or buy-to-let mortgage. To make matters worse, if you apply for a residential mortgage when your intention is to let the property to tenants (or apply for a buy-to-let mortgage if you plan to live there yourself) then you’re at risk of committing mortgage fraud. Eek! All sounds a bit scary.

 

What is the solution?

Well first you need to be absolutely clear on what you intend to use the annexe for. Will it be guest accomodation for your own home, will a family member be living there permanently (and presumably not paying rent!) or are you planning to rent it out as holiday accommodation or on a long-term let? Once you are clear, you can start looking at your mortgage options and, of course, we would advise that you find a reputable mortgage advisor to assist you.

A house with an annexe can be more difficult to obtain as a standard residential mortgage won’t always fit the bill. But it’s not impossible.

If you intend to let any part of the annexe, this may be achievable with certain lenders however permission must be sought to avoid being in breach of your mortgage terms. It’s all about doing your research and searching the whole market to find the right lender for your needs.
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As ever, taking professional advice is a must and Hudson Rose has experience dealing with these types of properties. We put customer service above everything so we’re always happy to take as much time as you need to chat through all your options. Give us a call and let’s see if we can find you a solution.

Speak soon! 🤘

GT

 

 

And if you’ve found this blog useful, we may have some more you’d enjoy:

Buy-to-Let Mortgages: Affordability and Deposits

It’s all about that Base (rate)…

5 ways your family might help you buy your first home

 

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

Hudson Rose Services Ltd is an Appointed Representative of Stonebridge Mortgage Solutions Ltd, which is authorised and regulated by the Financial Conduct Authority.
Hudson Rose Services Ltd, trading as Hudson Rose. Registered Office: 7 Bridge Street, Nailsworth, Stroud, GL6 0AA
Registered Company Number: 11008147 Registered in England

Hudson Rose Services Cirencester Ltd, trading as Hudson Rose. Registered Office: 78 Dyer Street, Cirencester GL7 2PF Registered Company Number: 13349772 Registered in England

There may be a fee for arranging a mortgage and the precise amount will depend on your circumstances. This will typically be £499. There is no charge for any initial consultation.

Your Home may be Repossessed if you do not keep up repayments on a mortgage or any other debt secured on it. Not all forms of Property Development Finance are regulated by the Financial Conduct Authority

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