Buying a home is an exciting and significant milestone in anyone’s life. For most, securing a mortgage is an essential step towards making that dream a reality. However, there are instances where a property may be deemed “unmortgageable.”
In this article, we will delve into what it means for a property to be considered unmortgageable, and provide guidance on what to do if you find yourself in such a situation. But first, let’s understand what it means when a house is deemed unmortgageable!
What Does Unmortgageable Mean?
When a property is labelled as “unmortgageable,” it means that traditional lenders are reluctant to provide a mortgage on that particular property. This could be due to a variety of factors that make it less attractive or risky from a lending perspective.
Reasons a house might be deemed Unmortgageable:
Let’s explore some common reasons why a property might fall into this category.
No kitchen or bathroom:
A property without a functional kitchen or bathroom is considered unmortgageable because these are essential amenities for comfortable living. Lenders will usually require a property to have these basic facilities in place to ensure that the property is habitable and meets the minimum standards of living conditions.
Severe damp or dry/wet rot:
Properties with severe damp or extensive dry or wet rot may be deemed unmortgageable by mortgage lenders. Damp and rot can compromise the structural integrity of a property and pose health risks to occupants, which can make lenders cautious about providing finance for these properties, as they may require costly repairs and affect the property’s long-term value.
Asbestos or other chemical pollutants:
The presence of hazardous substances, like asbestos or other chemical pollutants, can render a property unmortgageable. Asbestos, for example, poses significant health risks when disturbed, which can make lenders wary of financing these properties.
Where the property is located (mining shafts, landfill, flood risk)
Properties located near mining shafts, landfills, or in areas prone to flooding are considered less mortgageable. Mining shafts can pose stability risks, landfills may emit noxious odours and attract pests, while flood-prone areas present potential damage and insurance concerns. Lenders may also be put off by properties near industrial or commercial areas, like factories, petrol stations, garages, pubs or flats above restaurants and shops.
Lenders factor in these risks when assessing the viability of granting a mortgage on such properties!
Structural issues:
Properties with pre-existing, severe structural problems, such as subsidence or extensive damage are often deemed unmortgageable. Lenders may be cautious about financing homes that require substantial repairs or pose a safety risk to occupants.
Property valuation:
If the property’s value is significantly lower than the asking price or market value, it may be challenging to secure a mortgage. Lenders typically have strict criteria for loan-to-value ratios, making it difficult to obtain financing for properties with valuation issues.
Non-standard construction:
Certain types of construction, such as timber-framed, pre-cast reinforced concrete (also known as prefabricated or ‘prefab’ homes) or thatched-roof properties, can be viewed as non-standard. Though not inherently unmortgageable, these properties may require specialist lenders or a more comprehensive assessment before you’re able to secure a mortgage.
Leasehold issues:
Unresolved or complex leasehold issues, such as short lease lengths, high ground rents, or ongoing legal disputes, can sometimes deter mortgage lenders. They tend to prefer properties with secure and straightforward leasehold arrangements, ensuring long-term stability for both the homeowner and the lender.
Planning permission and building regulations:
Properties with unauthorised or non-compliant alterations or lacking proper planning permission and building regulations certification may face mortgage restrictions. Lenders prefer properties that adhere to legal requirements as this protects their investment.
Energy efficiency:
With increasing emphasis on sustainability and energy efficiency, properties with poor energy performance ratings may find it difficult to obtain a mortgage. Lenders may require a minimum Energy Performance Certificate (EPC) rating to reduce future running costs and environmental impact.
Japanese Knotweed or other invasive weeds:
The presence of Japanese Knotweed, a highly invasive plant, can pose a significant threat to a property’s structure and value. Lenders may be reluctant to finance properties affected by this plant due to the potential costly eradication and remediation processes.
In each of these cases, lenders are primarily concerned about the safety, habitability, and long-term value of the property. They aim to mitigate risks associated with potential health hazards, costly repairs, or adverse environmental factors that could affect the borrower’s ability to repay the loan as well as the property’s marketability in the future.
While these factors may make a property initially unmortgageable, it can often be possible to address and rectify the issues, making the property mortgageable with the necessary repairs, renovations, or risk mitigation measures.
If you’re struggling to obtain a mortgage on your property due to any of these issues, reach out to our team of expert mortgage advisers for advice and support.
What to Do if Your Property is Unmortgageable
If your property falls into the unmortgageable category, there are steps you can take to increase its mortgageability:
Seek professional advice:
Consulting with experienced mortgage advisors can provide trusted help and support into finding potential lenders who specialise in unmortgageable properties.
Address the issues:
Work with qualified professionals like structural engineers, surveyors, or architects, to assess and resolve any issues affecting your property’s mortgageability. Repairing structural problems or obtaining proper certifications can significantly enhance your chances of securing a mortgage!
Understanding what makes a house unmortgageable is crucial for anyone trying to obtain a mortgage in the UK. While various factors can contribute to a property being labelled unmortgageable, it’s important to remember that solutions exist even for the most challenging cases. Seeking expert advice and exploring alternative financing options can help turn an unmortgageable property into a mortgageable one, ultimately leading you closer to your dream of homeownership!
If you require assistance in assessing your property’s mortgage-ability or exploring specialist lending options, get in touch with our experienced team of mortgage advisors today. We are here to guide you through the process and find the best solution for your unique circumstances. Remember, your dream home may be more mortgageable than you think!
