Buying two properties as one?

A reader from Kent is planning to buy two adjoining thatched cottages in a single purchase, but wants to know his options.

Tony Davis, myfinances.co.uk mortgage expert from Mortgage Meadow, takes him through the problem.

Ryan from Meopham asks

My family is looking into buying two properties being sold as one.

What we need is a £220,000 mortgage on a property worth £440,000.

The three earners which would be more than enough to pass affordability and LTV is above 50%. The only other thing is it's a thatched cottage.

So all that in can we get a mortgage?

Tony replies:

If there are two individual registered titles then they will be treated as individual units for security.

This would mean that most lenders would look to arrange two mortgages, one on each property (although there are some companies that would consider a cross collateral charge meaning one loan secured against two properties, but this is not common practice).

Buying the two units (assuming that they are equally valued) will save you money on Stamp Duty as you will have two lots of one per cent charges (based upon a value of £220,000) rather than one charge at three per cent. However, it will mean two valuations and I am assuming that as the property is thatched it will be of some age, so you should also consider a structural report.

By breaking the transaction down into the two composite parts could also enable both properties to be subject to residential rates (assuming that it is being bought for you all to live in).

The thatched roof will deter some lenders but you do have a sizeable deposit, so providing the property surveys to an adequate standard and suitable buildings insurance is arranged there should not be any difficulty in arranging finance (subject to the status of the borrowers).

If you have a question for Tony, go to the myfinances.co.uk Ask the Mortgage Expert section.

Or for more information or mortgage advice go to Mortgage Meadow.

Mortgage Meadow is an independent mortgage broker and is authorised and regulated by the Financial Services Authority.