Selling an unmortgageable property

There might be many reasons that a property becomes unmortgageable. What does ‘unmortgageable property’ mean? You may be asking – simply speaking it’s a property, house or a flat – that mortgage lenders will not (give a mortgage on) approve. This means it will be more challenging to sell in comparison to a traditional property sale.

Potential buyers should be aware of all the pros and cons of buying an unmortgageable property, knowing all the info will help you if you are looking to buy or sell a property deemed unmortgageable.

We’ve created a list of some of the red flags, that could turn the dream house into an unmortgageable property nightmare.

How to spot an unmortgageable property on Rightmove /Zoopla

Usually, unmortgageable properties are very attractively priced. If the price seems too good to be true it most likely is. You will see a big ‘CASH BUYER ONLY’ or that the property is being sold through a modern auction in the listing.

Short lease remaining

Short lease properties are properties where there are less than 70 years left on the lease. Properties below 70 years become very expensive to renew due to the marriage value. When we talk about leasehold properties it is usually about flats. Without lease extension on completion mortgage lender will not approve a mortgage. A lease extension is a lengthy and expensive process. How long is it going to take depends on the cooperation between the freeholder, conveyancer and the buyer.

Property is not fit for people to live in

Every property needs a kitchen and a bathroom in working order for mortgage companies to agree to finance on. The lack of them will make the property unmortgageable.

Other reasons the property may be inhabitable are structural problems, severe damp, dilapidated property, damaged roof, fire damage and infestations.

Serious structural issues

Even though the vast majority of problems can be discovered during surveys, usually sellers are aware that there is structural damage to the property which makes it unmortgageable. Some structural problems can be easily fixed.

But if a property is built in an area affected by coal mining it makes it a problem property and the mortgage company will not lend on it. Mineshafts are the main cause of subsidence in the UK. Some sellers will try their luck and will not disclose any issues before selling. Most buyers will order a survey to avoid disappointment but we recommend it to every potential buyer.

Damp

In the humid British climate, damp in properties is very common. Most UK homeowners had to deal with it at one point or another. In most cases, it’s a fully manageable problem. Sometimes though the damp is so severe it poses health risks and makes the property uninhabitable.

Unless it’s just a surface condensation, rising and penetrating damp need to be dealt with by a professional team.

Rot infestations

Uncured damp makes a great environment for fungi to flourish, especially dry rot. Dry rot is a fungus that destroys wood and thrives in a wet, dark habitat. Dry rot needs to be dealt with quickly as it may affect the stability of a house and make it unmortgageable.

Japanese knotweed

Japanese knotweed is the most invasive out of all of the plants in the UK. It grows extremely quickly and is very difficult to get rid of. The area needs to be repeatedly treated. Mortgage lenders do not want to see Japanese knotweed in close vicinity of a house. If it’s less than 7 meters it will make the property unmortgageable.

Low-value property

Low or very low-value properties are considered properties worth less than £40,000. Mortgage lenders are not interested in financing low-value dwellings. Those need to be bought for cash or via modern auction.

Non-standard construction

Most houses are built with bricks and the roof is covered in roof tiles. Anything that’s outside that box for mortgage lenders is a red flag. After WWII UK needed to rebuild the country. Prefab houses seemed like a good idea at that time. Produced quickly on a steel frame, easy to transport. Unfortunately, many of them were defective and the roof was made out of asbestos. Back then it was unknown that asbestos is harmful material, now with new building regulations, it’s classified as non-standard construction.

What’s the alternative?

If you happen to find yourself in a situation where you need to sell an unmortgageable property fast you’re in the right place. Companies like ours, SpeedPropertyBuyers, specialize in buying problem properties. We offer a free valuation to all UK home sellers who are trying to sell their property quickly. We cannot offer a full market value but we promise to buy your property within a time period that suits you which can be from days to weeks. By selling your unmortgageable house to us you are saving a lot of time and stress as you do not have to deal with estate agents, there are no estate agent fees either. We take care of everything to make the sale as smooth as possible. What we offer you is what you get guaranteed.

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