What makes an unmortgageable house

(And how you can fix it)
Whether buying or selling, this guide is for you.

From an unmortgageable property to mortgageable

Okay, property owners.

You’re ready to sell that piece of property and make a tidy piece of profit for your future - to move into another spot, or to bulk up your finances, or to add a little more money into your pocket.

However … if you own a piece of property, there’s a chance that any number of catastrophic or not-so-catastrophic things may actually give that piece of property the scarlet letter of being an “unmortgageable property”. That designation means, simply, that the piece of property that you’re getting ready to sell will not be able to have the interested buyer secure a mortgage on the property - the potential kiss of death for the sale.

That’s not good. Luckily, we’re here to help!

In this guide, we’re going to identify the most common causes of a property being deemed “unmortgageable” - and from there, we’re going to show you the steps you can take to correct these problems and get your property sold.

Additionally … this guide will also work for the parties that may be interested in purchasing the property. Before you go ahead and bid on something you’re interested in, make sure that these red flags for an unmortgageable property don’t exist; you don’t want to be bidding on a spot you’re not able to get the financing for!

Try It: Sell Your House Fast at Yes! Homebuyers

Red Flag #1: No Kitchen or Bathroom 

There are certain things that humans need in their daily lives. A place to cook their meals is one of them. A place to deposit the aftereffects of said meals is another. That means that a property absolutely needs a kitchen and a bathroom.

It’s hard to imagine that most modern properties wouldn’t include a kitchen or a bathroom, but you never know - if you have a place without one of these, for whatever reason, there’s a very good chance that the property will be deemed unmortgageable, for understandable reasons.

Unmortgageable Property Should have a Bathroom for a Mortgage

Additionally, if the kitchen or bathroom in the residence is deemed unusable

 (try not to read that sentence without thinking of the bathroom from Trainspotting, we dare you) you’ll also be determined to have an unmortgageable property.

So, if you have one of these properties that are either missing a kitchen or a bathroom - or either are in shockingly poor states of disrepair - you’ll need to lay out the cash to either make the repairs or install the necessary necessities in your property.

The solution is that simple.

Read: A Guide To Selling Your House in Disrepair

Red Flag #2: Two Kitchens!

On the other end of the spectrum, having more than one kitchen in the property might also cause it to fall into the “unmortgageable” spectrum. No joke!

The logic behind this is very simple - if you have an extra kitchen in the property, the thought is that you could easily sub-let it out to another tenant. That’s not looked on kindly by mortgage providers. If you’re stuck in this situation, think about redoing your kitchen area or come prepared with a very good explanation for the future tenants.

 Check: Is Your House Interior Outdated?

Red Flag #3: Based Close to a Commerical Property 

Let’s say you own a piece of property that’s above some type of commercial enterprise - a house that’s located right next to a shop or an apartment that’s above or below a carpet store or convenience store.

Those set off wild alarms with mortgage lenders, as there’s a tremendous risk for those commercial properties to eventually be turned into a store or property that would reduce the value of your property.

After all, who wants to live next to a betting establishment or a 24 hour licensed corner shop?

Unfortunately, there’s not much you can do if your property is next to one of these commercial ventures. Just be aware that you may have to peek around high and low for a tenant with a lender that may give them the mortgage for the property.

Must Read: You Won't Believe These 10 Common Property Disputes

Red Flag #4: Short Leases 

If you bought the property with a shorter lease length - let’s say anywhere up to 70 years - the property will not seem attractive to a potential mortgage lender. Again, the logic is simple - the longer the lease, the longer the element of control is.

So if you have a shortened lease on the house, there’s a good chance you’ll have to seek high and low for a lender who will be able to provide a mortgage for the property. You can always try to re-negotiate the lease to secure some more favourable terms; that may make selling the property a bit easier.

Read Now: 5 Things Yes! Homebuyers Learnt About Leasehold vs. Freehold Property

Red Flag #5: Wait, My House is Made of Something Strange?

Unusual Construction on Property Can make it Unmortgageable

Remember the fairy tale about the houses made out of candy canes and chocolate? Well, let’s pretend that’s real life; if that were the case, the owners would never be able to find a seller who could get a mortgage for that property.

That’s an extreme fantasy example - if a delicious one - but the point remains.

Mortgage lenders look for houses that are stable and traditional; therefore, if your piece of property has some type of unusual or extreme construction, you’re going to have a hard time finding a mortgage lender for a buyer.

Most of the time this type of unusual construction will be in the frames of the property - a concrete prefabrication house, for example, or a metal frame or even a thatched roof.

If you have any of these things in the property, it’s not likely to completely sabotage the process, but it’ll definitely slow it down.

Great Read: Selling a House with Non-Standard Construction

Red Flag #6: When Nature Calls 

It’s very important to have a good grasp on the nature that surrounds your property.

Mother Earth can sabotage the mortgage process just as quickly as any of these other elements can. If you have an invasive plant on the property, such as Japanese knotweed or Himalayan basalm, these type of natural incursions can hamstring the mortgage lending process.

Go through and make absolutely sure that these type of evil plants - also, if you have the venus flytrap from Little Shop of Horrors, that’d be bad too - are eradicated from the property before you try to sell.

Red Flag #7: When Nature Calls, Part II

There are more natural concerns that could affect the mortgage process.

Again, generally, these are elements that you cannot really control; you’ll just have to be super-aware that these elements may be there.

If your home is close to a floodplain or area of recent flood damage, or near a landfill or undesirable waste location, or if there is some type of large-scale excavation, mining or government land development, then your property may be affected by that most basic of phrases - location, location, location.

You may have to have a great deal of patience when searching for your buyer.

Open: Should Your Repair Your Flood Damaged Home Before Selling?

Red Flag #8: Little Value, Little Chance

There’s a floor to the amount of value that will be attractive to mortgage lenders. The higher the property value is, of course, the easier it will be to attract interest and lenders.

On the other end of the spectrum?

Let’s say your property is of a very low value - a good general rule for this is £50,000 pounds; if that’s the case, buyers are going to have a very hard time securing any sort of financing for the property. Do whatever you can - if you can do anything - to increase the value of the property before you go ahead and list it.

Do it! Value Your House at Yes! Homebuyers

Red Flag #9: Increasing Ground Rent

If the property includes a provision for ground rent - literally, the amount that is owed to live on the ground where the habitation resides - there’s a chance that some type of unscrupulous arrangement can cause those rent charges to go up higher and higher on some type of schedule.

That’s not attractive to sellers or mortgage companies. Try to re-negotiate, if you can.

Red Flag #10: Weak Infrastructure 

Take a very hard look at the infrastructure of your property.

Weak Infrastructure Can Make a Property Unmortgageable

If there are any massive defects within the structure of the house, the mortgage process could be torpedoed very quickly.

If there’s a bit of the property that’s fallen into severe disrepair - a crumbling staircase, rot or water damage anywhere, a broken elevator, a flooded-out basement, a wind- or storm-damaged roof - there’s almost no chance of securing a mortgage for the property.

Read: The Shocking Truth of Dry Rot if You're Trying to Sell Your House

Before you put your house out there one the market, it’s essential that these massive problems (if any) be fixed on your property.

So those are the red flags that can cause an unmortgageable property - be aware of all of these before you hit the trigger on your sale. One more thing: don’t forget about the flexible, open options an organisation such as Yes! Homebuyers can provide for you to get rid of your property and sell your house fast.

Further Reading:

A Home Surveys Guide for Buyers and Sellers

How To Price Your House Correctly (And Get the Sale!)

Beware of the Ever Growing and Feared Down Valuation