Dividing lot with a mortgage

[Mark Tomseth jr]

Hoping to get some additional direction and ideas...

We purchased a house in Bend, Oregon on a large Lot, just under 3/4 acre, in the city. I have a mortgage on the property and looking to divide the lot with hopes to build a house and ADU on the newly created lot(there is potential to create 2-3 additional lots according to the zoning)

My question; Can I divide the property then refinance the current house with a smaller lot? (with the understanding the value can change) then have a lot free and clear to build on or sell?  

I've never done anything like this before so I am in initial research stages. Any advice is helpful.

Thank you in advance!

[Joe Splitrock]

Dividing is different than building an addition or ADU. When you divide a lot, you change the legal description of real estate that has a lien on it. You will need their permission and they will need to do a partial mortgage release or refinance the loan. I don't think it is wise to attempt this without their permission or knowledge. This is not an uncommon request, so they will have a process to help you work through it.