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Mortgage For House With An Annexe

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Mortgage for house with annexe 

 We provide high-quality mortgage solutions for properties with an annexe.

Here's our most recent case study in which we helped our client secure a large mortgage for a property with an annexe:

Mortgage for house with annexe

We can deliver enhanced, bespoke or exclusive terms through our market knowledge.  
Call us on 0203 900 4322 to discuss your requirements or book a call-back at a time that suits you.

Can I get a mortgage for a house with an annexe?

Yes, you can get a mortgage for a house with an annexe.

It can be a little more complicated than the started mortgage process depending on the type of annexe and how you'll be using it - but it's certainly possible.

An annexe is a separate living space within or attached to a primary property, often used for housing family members and guests or as a rental unit.

Depending on the lender you're speaking to, they may have specific requirements or criteria when considering such properties.

Here are 4 factors to consider:

The lender must assess the property's value, including the annexe. This is important because the property serves as collateral for the mortgage. A professional surveyor will typically be involved in this process.


If you plan to rent out your annexe, some lenders may consider the potential rental income in their affordability calculations. This could increase the amount you can borrow, but each lender will have different policies.


Some lenders may classify a property with an annexe as a multi-unit property or a home with a 'granny flat,' which could affect your available mortgage products. Working with a lender who understands your situation and can offer suitable mortgage options is essential.


Each lender has unique criteria for lending on properties with annexes. You may need to shop around and speak to multiple lenders to find one willing to provide a mortgage for your specific situation.

To navigate the mortgage process for a property with an annexe, consider working with a mortgage broker who can help you find the most suitable mortgage product and lender for your needs.

It's essential to understand the terms and conditions of any mortgage offer to ensure it meets your financial requirements and expectations.

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How do mortgages for annexed properties work?

When applying for a mortgage for a property with an annexe, the process generally follows these steps:


Start with researching different mortgage lenders' criteria for properties with annexes.

Working with a mortgage broker who can guide you through this process and recommend suitable lenders based on your specific situation may be helpful.


Obtain a mortgage pre-approval to understand how much you can borrow. This will help you narrow down your property search and give you a better understanding of your budget. Remember that an agreement in principle is not a guarantee of a mortgage offer. Still, it is a helpful tool to gauge your eligibility.

Property Search

Look for properties with an annexe that fit within your budget and meet your requirements. You may need to work with an estate agent familiar with such properties to help you find the right one.

Mortgage Application

Once you've found a suitable property, submit a mortgage application to the lender. This will involve providing your financial information, including your income, assets, liabilities, and credit history. The lender will use this information to determine if you qualify for a mortgage and, if so, how much they are willing to lend.

Property Valuation

The lender will arrange for a professional surveyor to assess the property's value, including the annexe. The valuation will help the lender determine if the property is suitable security for your mortgage.


Your mortgage application will go through an underwriting process. The lender will evaluate your financial situation and the property's valuation to decide whether to approve your mortgage. They will also consider any additional factors specific to the property with an annexe, such as rental income or the property's classification. They may also look at your credit profile, personal expenses and outgoing and many other factors.

Mortgage Offer

If your mortgage application is approved, the lender will issue a mortgage offer outlining the terms and conditions of the loan. Review this carefully to ensure it meets your needs and expectations before accepting the offer.


Once you accept the mortgage offer, the completion process begins. This involves signing legal documents, transferring funds, and finalising your property purchase. You will become the property owner, assuming responsibility for repaying the mortgage. 

mortgage case study

What are the requirements?

From an applicant's perspective, the requirements to get a mortgage for a property with an annexe are similar to those for a standard mortgage. Here are the key factors that lenders typically consider:

A good credit score demonstrates your ability to manage debt responsibly and make timely payments. Lenders may have a minimum credit score requirement for mortgage approval.

Lenders want stable employment and a consistent income to ensure you can afford the mortgage payments. You'll need to provide proof of income, such as pay slips, tax returns, and employment verification letters.

Debt-to-Income Ratio (DTI): This ratio compares your monthly debt obligations (credit card payments, car loans, and student loans) to your gross monthly income. Lenders use DTI to assess your ability to manage additional debt. A lower DTI is generally more favourable, and lenders may have a maximum DTI limit for mortgage approval.

Loan-to-Value Ratio (LTV): The LTV ratio is the amount you want to borrow compared to the property's value. A lower LTV means you have more equity in the property, which is less risky for your lender. Lenders may have a maximum LTV limit for mortgages on properties with annexes - we can raise funding at high LTV but it depends on your specific situation.

The bigger deposit, the better - a deposit payment reduces the amount you need to borrow, lowering the LTV and making getting approved for a mortgage easier.

Property Valuation: Your lender will want to ensure the property, including the annexe, is worth the amount you wish to borrow. A professional valuation will be conducted to determine the property's value.

Lenders may have specific criteria for properties with annexes, such as whether they are classified as multi-unit properties or homes with 'granny flats.' Make sure you understand the lender's classification and requirements.

Some lenders may require you to demonstrate the potential rental income if you plan to rent out the annexe. This could involve providing rental comparables or a rental assessment from an estate agent.

Each lender has varying requirements or criteria when considering mortgages for properties with annexes.

Working with a mortgage broker can help you understand their specific needs and find a suitable mortgage product for your situation.

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How can I fund a new annexe for my home?

There are many ways you could fund an annexe build, including remortgaging to raise capital, getting a second charge mortgage, or a bridging loan.

The best option for you will generally depend on your financial circumstances. If you have ERCs on your current mortgage, for example, remortgaging may be more expensive than a second charge.

Our video summarises the process of getting a second charge mortgage:

But if you have a high credit score or need funds quickly, a bridging loan could be a better funding option for an annexe property - it all depends on your financial and personal situation. 

A bridging loan is a short-term loan designed to "bridge" the gap between immediate financing needs and long-term funding solutions. Here's how it works and the pros and cons:

How it works:

  • Apply for a bridging loan with a lender (or via a broker), specifying the loan amount needed for your annexe construction.
  • If approved, you'll receive the funds quickly - usually within a few weeks.
  • Use the funds to finance the annexe construction.
  • Repay the bridging loan when you secure long-term financing, such as refinancing your existing mortgage or obtaining a home improvement loan.


  • Quick access to funds: Bridging loans are usually processed faster than traditional loans, making them suitable for urgent financing needs.
  • Flexible repayment terms: Depending on the lender, you might have the option to defer interest payments until the loan is repaid, allowing you to focus on the annexe construction.
  • No restrictions on use: Bridging loans can be used for various purposes, including funding an annexe.


  • High interest rates: Bridging loans typically have higher rates than traditional loans due to their short-term nature and associated risks.
  • Additional fees: You might encounter arrangement fees, exit fees, and valuation fees, which can increase the overall cost of the loan.
  • Risk of default: If you fail to repay the bridging loan within the agreed timeframe, you risk losing your property, as bridging loans are usually secured against your home.

When considering a bridging loan to fund a new annexe, weighing the pros and cons, comparing lenders, and having a clear plan for repaying the loan when long-term financing becomes available is essential. Speak to an adviser if you're unsure.

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What if you want to rent out your annexe?

If you plan to rent out your annexe, there are financing options that take your potential rental income into account. This could affect the construction financing and the mortgage on the main property. Here are some options to consider:

Buy-to-Let Mortgage

If you purchase a property with an existing annexe to rent out, you could apply for a buy-to-let mortgage. Lenders will typically consider the potential rental income when assessing your affordability for this type of mortgage.

Remortgage with rental income

If you own the property and want to build an annexe to rent out, you could consider remortgaging. Some lenders may consider the potential rental income when assessing your application, which could help you borrow more to fund the construction.

When planning to rent out an annexe, comply with all applicable regulations and requirements, such as obtaining planning permission, meeting building regulations, and adhering to landlord responsibilities. It would help if you also considered potential tax implications, as rental income is subject to income tax.

It's essential to discuss your plans with a financial advisor or mortgage broker who can help you determine the best financing options for your specific situation and guide you through the process.

mortgage example case study


Does an annexe count as a separate dwelling?

An annexe can be considered a separate dwelling if it has independent living facilities such as a kitchen, bathroom, and bedroom and can be accessed separately from the main property.

How much value does an annexe add to your home?

The added value of an annexe can vary depending on factors like location, quality, and size. On average, an annexe could add up to 20-30% to the value of your home.

Do you pay extra stamp duty on an annexe?

Annexes, also known as granny flats, are not always considered separate properties when it comes to the 3% stamp duty land tax (SDLT) surcharge applied to buy-to-let properties and second homes.

However, it depends on the value of the annexe compared to the main home, what you're planning to do with it, and whether it’s on a separate title and classed as a separate dwelling. To get a definitive answer it's worth speaking to an adviser before you make a decision on your purchase and funding option.

How many bedrooms can a granny annexe have?

A granny annexe can have one or more bedrooms, depending on planning permissions, available space, and your specific needs.

Can I use my annexe as a holiday let?

Yes, you can use your annexe as a holiday let, provided you comply with planning permissions, building regulations, and any relevant rental or holiday let requirements.

Is an annexe classed as a second home?

An annexe may be classed as a second home if it is a separate dwelling and used independently of the main property - check with an advisor if you're unsure.

Can an annexe have a kitchen?

Yes, an annexe can have a kitchen, which is essential for it to be considered a separate dwelling with independent living facilities.

Is a granny flat an annexe?

A granny flat is an annexe, typically a self-contained living space built within or attached to a principal property. It is designed to accommodate elderly relatives or other family members but can also be used for various purposes.

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