Can I turn my mortgaged house into flats?

My six-bedroom house would convert into three flats but I still have a mortgage on it and need to borrow money to do the work. What are my options?
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Question: I am thinking of turning my six-bedroom house into three separate two-bedroom flats, but the property is still mortgaged. Can I do this even though I have not paid off the mortgage? What are my options, as I would need to borrow further money to do the work?
Answer: Not many mainstream lenders would be keen to deal with a situation like this because they would be worried that you may default, leaving them with a half-finished property that would likely be difficult to sell.

You should talk to your existing lender about your plans to see if they would be willing to continue lending — some banks will consider funding a renovation project on a commercial basis. They may lend on the current value of your property, but keep some money back until the work is done and the property is revalued.
If your existing lender is not interested in lending to you, then you could consider a development or refurbishment loan, which would enable you to bridge the works and repay your existing lender.
This is likely to be more expensive, but will allow you to do the works you propose and then, once the project is finished, you could remortgage or refinance on standard terms.
Consult a specialist mortgage broker who deals with conversions and new builds, as there are some good specialist products around.
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If you have a question for Fiona McNulty, please email or write to Legal Solutions, Homes & Property, London Evening Standard, 2 Derry Street, W8 5EE. We regret that questions cannot be answered individually but we will try to feature them here. Fiona is legal director in the real estate group of Foot Anstey LLP in Exeter (
These answers can only be a very brief commentary on the issues raised and should not be relied on as legal advice. No liability is accepted for such reliance. If you have similar issues, you should obtain advice from a solicitor.

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