A bridging loan can be used to purchase or refinance an unmortgageable property. But what makes a property unmortgageable for a high street lender?
1. Structural issues – a property with cracked walls, severe damp, uneven floors, damaged roof, uneven or damaged chimneys, rotting timber are all indicators of structural problems they may require extensive renovation and cost to set right.
2. Uninhabitable – a property that is derelict and not in a condition to be lived in.
3. No kitchen or bathroom – most mortgage lenders will consider a property to be uninhabitable without basic services.
4. Lease issues – a mortgage will be difficult to obtain for leases less than 70 years remaining or if there are defects in the lease that compromises the maintenance and integrity of the property for example, where there is no provision to repair or maintain parts of the property.
5. Non-standard construction – a property not built from brick or stone walls and roof made from slate or tile. Properties not built from these materials are considered more difficult to sell, costly to maintain, potentially unsafe and difficult to insure. Examples of non-standard properties and material used to build a property include but not limited to: prefabricated concrete; thatched homes; listed buildings; steel framed; timber frame; glass walls; flat roofs; cob concrete; timber and certain types of external cladding.
6. Low value properties – it is not economical for most lenders will not offer a mortgage for properties valued less than £50,000.
7. High rise properties – criteria can vary depending on the lender appetite, quality of the property, location, demand, and lift access beyond a certain number of floors. Some lenders will cap the number of floors to five and others will have higher or no restrictions at all. Getting a mortgage for a high-rise flat is typically easier in London as they are considered more saleable the outside. It is always worth checking with lenders first before committing to purchase.
8. Environmental problems – many mainstream lenders will not consider properties with the following issues:
- A history of flooding and subsidence
- Invasive weeds such as Japanese Knotweed, Himalayan Balsam and Giant Hogweed can cause great damage to property that will impact on the saleability and market value if untreated.
- Close to mines, landfill, and sites with contamination risk
9. Ex council or local authority housing – various issues arise for this type of property including:
- Generally, a highly concentrated in rented accommodation and lower owner-occupied.
- Less desirable and more likely fall in value
- A construction may be prefabricated concrete
- Recent issues with external cladding
- Balcony access to your property
10. More than one kitchen – The risk to lenders is the possibility the property being sub-let, thus breaching to terms of many buy to let mortgages. Where there are two or more kitchen, you can remove the kitchen prior applying for a mortgage or agree a full or part retention with the lender until the removal is done.
11. Flats above shops – Lenders are particularly keen to avoid flats above restaurants, takeaways, pubs, and licensed premises because of the likelihood of noise, smells, violence, and other anti-social behaviours that will reduce demand and negatively impact future resale values.