If you have a house with a mortgage, it means the bank has a claim to your property. This means you can’t demolish your house without the bank’s permission.
It can be confusing to know what to tell your bank. There are some things that you might not even know you need to tell them, whether you are getting a loan or already have one.
Notify Lender House Rebuild
- It is important to disclose a knock down rebuild to a lender when a mortgage is held on the property.
- The bank has a claim on the property equal to the balance of the mortgage.
- Any other lending linked to the property must be taken care of prior to the knock down.
- The value of the property may not change much or even go up once the build is complete.
- A construction loan can be applied for with the lender to build the property.
In this case, it’s important to tell your bank if you are thinking about tearing down your house and rebuilding it. Even if you are using your own money and not getting a loan, you still need to tell them.
That’s because your bank has a claim on your house because of the loan you have. That means they own part of it. You agreed to pay for the house, which includes any structures on it, when you signed the loan documents.
By law, you have to keep your promise. You also need to make sure any other loans you have connected to the house are taken care of before you tear it down. The bank might find out even if you don’t tell them.
If you want to rebuild, you can apply for a construction loan with your bank. They will need to see that you have a signed building contract and check to make sure you can pay for it. If you’re not sure what to do, it’s best to be honest with your bank or talk to a broker to see what your options are.