Table of Content
Introduction
Properties with annexes offer great flexibility, whether you need extra space for family members, a dedicated workspace, or even a potential rental opportunity. However, securing a mortgage for such properties can be more complex than a standard residential home. Lender criteria vary, and factors such as the intended use of the annexe and its construction type can impact your mortgage options. In this guide, we’ll cover everything you need to know about getting a mortgage for a property with an annexe.
Can You Get a Mortgage on a Property with an Annexe?
Yes, you can, but the options available will depend on the lender’s specific criteria and how you plan to use the annexe. Some mortgage providers are happy to lend on properties with annexes, while others may have stricter requirements or exclude them altogether. In some cases, you might need to provide a larger deposit to secure financing. This is where an experienced mortgage broker can be invaluable, as they can help you find the most suitable lender for your situation.
Looking for 5 star mortgage advise? We’re ready to help.
Whatever stage you’re at, it’s never too early to reach out.
View all 53 reviews on Trustpilot
5 star based on 197 Google reviews
What Defines an Annexe?
An annexe, often referred to as a ‘granny flat,’ is a self-contained living space that is part of the main property but does not have a separate address. Traditionally, annexes were used to accommodate elderly relatives, but today they serve a variety of purposes, including home offices, personal gyms, or even short-term rental accommodations.
Unlike a standard home extension, an annexe does not have to be attached to the main house. It can be located within the same structure or exist as a separate, converted building within the property grounds. However, to be considered an annexe rather than an independent dwelling, it must remain under the same legal ownership and title as the main home.
Lender Criteria for Mortgages on Properties with Annexes
Mortgage lenders assess properties with annexes based on several factors, including:
- Subletting potential – If the annexe is or could be rented out separately, some lenders may be reluctant to offer a mortgage.
- Business use – Properties with annexes designated for certain business activities may require specialist mortgage products.
- Occupancy arrangements – Most lenders require all occupants to be part of the same household and discourage completely separate living arrangements.
- Number of lodgers – Many lenders cap the number of lodgers at two if renting out part of the property.
Why Can It Be Difficult to Get a Mortgage on a Property with an Annexe?
The main challenge with annexes is that lenders may view them as having a higher risk compared to standard residential properties. Potential concerns include:
- Subletting complications – If the annexe is being rented out separately, lenders worry about the legal complexities in the event of repossession.
- Independent access and utilities – If the annexe has a separate entrance, kitchen, and utility services, it may resemble a standalone dwelling, making it harder to secure traditional residential financing.
- Size and proportion – If the annexe is disproportionately large compared to the main home, lenders may see it as an investment property rather than a standard residence.
Outstanding service and clear communication are at the core of what we do. But don’t just take our word for it—read firsthand experiences from our clients and discover why they rate us a 5-star mortgage broker.
How Much Deposit Will You Need?
The required deposit will depend on how the property is used:
- Standard residential mortgage – Deposits can start from 5%, but options increase, and interest rates improve with higher deposits.
- Buy-to-let mortgage – If the annexe is to be rented out, expect to need a minimum 25% deposit.
- Second home mortgage – If you’re purchasing the property as an additional residence, you may need a larger deposit than for a primary home.
Can You Rent Out an Annexe?
Most lenders do not allow annexes to be rented out separately from the main home due to concerns over legal complexities, especially in cases of repossession. Properties where the annexe has separate utilities, entrances, or is entirely self-contained are often considered riskier by lenders. If your goal is to rent out an annexe, you may need a specialist mortgage or a buy-to-let loan.
What Construction Types Are Acceptable for Annexes?
Annexes can be built using a range of materials, including brick, timber, and even glass structures. However, properties considered ‘non-standard construction’ may require specialist lenders. If an annexe is built using unconventional materials, securing a mortgage may be more challenging.
Can You Use an Annexe for a Business?
Running a business from an annexe has become more common, especially with the rise of remote work. Many lenders allow this as long as the business use does not dominate the property. Generally, the annexe should not take up more than 40% of the total living space. If the business use is more extensive, a specialist mortgage may be required.
5.0 based on 197 Google Reviews
Speak to an advisor today, to lock you in with the best deal.
How Strive Can Help
Navigating the mortgage market for properties with annexes can be challenging, but at Strive, we specialize in finding the right mortgage solutions for unique properties. Our expert mortgage advisors have access to a wide range of lenders, including those who offer competitive deals on homes with annexes. Whether you’re looking for a residential mortgage, a buy-to-let loan, or need help with business-use considerations, we can provide tailored advice to match your needs.
We take the stress out of the mortgage process, ensuring you get the best possible rates and terms available. If you’re looking to secure a mortgage for a property with an annexe, get in touch with us today for expert guidance and a free consultation!
Frequently Asked Questions
Some lenders permit annexes to be used as holiday lets, but this usually requires specific planning permission. Additionally, mortgage providers will have their own criteria, so it’s essential to check before proceeding.
Yes, but fewer lenders offer these mortgages compared to standard residential properties. The eligibility depends on the annexe’s size, intended use, and whether it meets lender requirements.
Strive Mortgages saves you time, hassle & money
Jamie Elvin
Jamie is an expert in all things mortgages, and our most experienced broker. Connect with Jamie and get started to see how Strive Mortgages can help you.
