Once again sorry for the length of this post
This was my question to my solicitor
I own a F/H property which is a building consisting of a shop/office ground floor (vacant), s/c 2 bed flat 1st floor(AST), s/c 1 bed flat 2nd floor (AST)
Currently it is all under one title and is mortgaged to HSBC - divided into 2 loans - one for the shop and one for the two flats combined
Recently they increased my mortgage from 2.5% to 5% including BoE BR
I am considering moving my loan(s) but it seems that in order to get the best deal I have to separate the commercial and residential into 3 titles - then mortgage the 2 flats and pay off the commercial part - leaving it mortgage free
I have 7 years left on the shop/office mortgage and 15 years on the combined residential mortgage and it is costing me £1900 a month Capital and Repayment - the 2 flats cover this (just) and combined value is around £300k (conservative estimate for re-mortgaging purposes) - o/s mortgages £220k combined
I suppose what I am looking to do is to change lender, get a cheaper deal, but continue to make the same payments - so in essence overpaying and bringing the mortgage term down.
So far my search has been fruitless - none of the lenders offering the best buy deals seem to like the fact that I am a Professional Landlord (as they put it)
Even HSBC will not convert over to Residential BTL - giving the same reason
Spent a lot of time talking to Bank of China who were even prepared to lump the Arrangement Fee into one as it was all in one place at one time. Eventually - the same answer - you are a Professional Landlord - not what were are looking for.
Once I got the answer from my solicitor it seems to me I should just stay put and not bother doing anything
Her answer:
It is a straightforward process. You would ideally leave the freehold title as it is, and then create three new leasehold titles. (I would advise against having freehold flats, not least because they are harder to mortgage and so would be less valuable, quite apart from other disadvantages).
For each residential lease (which should be in similar form) we would charge £500 for the lease and registration. I have discounted these charges because of the duplication on the second lease.
For the commercial lease, (preparation and registration) we would charge £750.
Assuming that we act for your lender on the two separate mortgages for the residential flats, we would discount our usual fees because there would obviously be duplication of work for the two titles making the second matter quicker.
Ordinarily we would charge £350 per property but we would discount the fee for the second flat to £150, i.e £500 for the two.
I note that if you achieve your objective, there will be no mortgage for the commercial lease.
You will need to put the leases into different names (as if they are all in the same name as the freehold then the titles would simply “merge”) – if you want the leaseholds in your own name you might consider setting up a small company and transferring the freehold title to the freehold company. Or you may for tax reasons find it beneficial to have the leaseholds in the names of you and other family members for example.
If we prepare all 3 leases and act for the lender on the two mortgages our total fees would amount to £2250.00. Vat would be payable on these fees
In addition to our fees, there will be certain third party expenses. The expenses will mainly relate to search fees (for the mortgage lenders – probably in the region of £350) and land registry registration fees – these vary from £50 per title upwards and will depend on the premium payable for each of the leases. You might also have to pay stamp duty land tax on the leases depending on the premiums and (in the case of the commercial lease) the rent. There is a very easy to use stamp duty land tax calculator on the hmrc website – you just enter the information as prompted and it confirms the calculation – but let me know if you would like any guidance on this.
Comments please - thanks in advance...
This was my question to my solicitor
I own a F/H property which is a building consisting of a shop/office ground floor (vacant), s/c 2 bed flat 1st floor(AST), s/c 1 bed flat 2nd floor (AST)
Currently it is all under one title and is mortgaged to HSBC - divided into 2 loans - one for the shop and one for the two flats combined
Recently they increased my mortgage from 2.5% to 5% including BoE BR
I am considering moving my loan(s) but it seems that in order to get the best deal I have to separate the commercial and residential into 3 titles - then mortgage the 2 flats and pay off the commercial part - leaving it mortgage free
I have 7 years left on the shop/office mortgage and 15 years on the combined residential mortgage and it is costing me £1900 a month Capital and Repayment - the 2 flats cover this (just) and combined value is around £300k (conservative estimate for re-mortgaging purposes) - o/s mortgages £220k combined
I suppose what I am looking to do is to change lender, get a cheaper deal, but continue to make the same payments - so in essence overpaying and bringing the mortgage term down.
So far my search has been fruitless - none of the lenders offering the best buy deals seem to like the fact that I am a Professional Landlord (as they put it)
Even HSBC will not convert over to Residential BTL - giving the same reason
Spent a lot of time talking to Bank of China who were even prepared to lump the Arrangement Fee into one as it was all in one place at one time. Eventually - the same answer - you are a Professional Landlord - not what were are looking for.
Once I got the answer from my solicitor it seems to me I should just stay put and not bother doing anything
Her answer:
It is a straightforward process. You would ideally leave the freehold title as it is, and then create three new leasehold titles. (I would advise against having freehold flats, not least because they are harder to mortgage and so would be less valuable, quite apart from other disadvantages).
For each residential lease (which should be in similar form) we would charge £500 for the lease and registration. I have discounted these charges because of the duplication on the second lease.
For the commercial lease, (preparation and registration) we would charge £750.
Assuming that we act for your lender on the two separate mortgages for the residential flats, we would discount our usual fees because there would obviously be duplication of work for the two titles making the second matter quicker.
Ordinarily we would charge £350 per property but we would discount the fee for the second flat to £150, i.e £500 for the two.
I note that if you achieve your objective, there will be no mortgage for the commercial lease.
You will need to put the leases into different names (as if they are all in the same name as the freehold then the titles would simply “merge”) – if you want the leaseholds in your own name you might consider setting up a small company and transferring the freehold title to the freehold company. Or you may for tax reasons find it beneficial to have the leaseholds in the names of you and other family members for example.
If we prepare all 3 leases and act for the lender on the two mortgages our total fees would amount to £2250.00. Vat would be payable on these fees
In addition to our fees, there will be certain third party expenses. The expenses will mainly relate to search fees (for the mortgage lenders – probably in the region of £350) and land registry registration fees – these vary from £50 per title upwards and will depend on the premium payable for each of the leases. You might also have to pay stamp duty land tax on the leases depending on the premiums and (in the case of the commercial lease) the rent. There is a very easy to use stamp duty land tax calculator on the hmrc website – you just enter the information as prompted and it confirms the calculation – but let me know if you would like any guidance on this.
Comments please - thanks in advance...