Thanks for your enquiry.
Provided any Sale price covered how much you owe on your Mortgage (£137,000), there would be no issue with your Mortgage Lender to your proposal.
What is more of an issue is whether you would obtain planning permission (you or the Developer would need to apply for change of use into 3 Flats). If granted, the Developer would also need to need to obtain Building Regulations approval for the 2 new Flats and you would also need to obtain Building Regulations for "the Flat" in which you are to reside.
Any Developer will therefore have to weigh up the cost of putting in these applications and the cost involved in fitting out before deciding whether the price you want is reasonable, and which still leaves them with making a profit on any re-sale.
From a legal point of view, it is certainly possible, and what would happen is that you would have to create 3 Leasehold titles, for each of the 3 Flats, and it would be wise for you to retain ownership of the Building itself. Alternatively, a Management Company could be set up, and the members of the Management Company would be yourself and the 2 other Flat owners. You as Freeholder or the Management Company would then be responsible for arranging the block Buildings Insurance for the building and overseeing any works/repairs/maintenance to the structural and communal parts.
So, it is not very straight forward to be honest, but is possible, provided the exercise of converting the building into 3 flats does not work out to be too expensive compared to the price you require for the "2 flats".
I hope this assists. If so, I would be grateful if you could rate my answer in the top right hand corner of your screen.