2021 Update

What Makes a Property Unmortgageable? (And How You Can Fix It)

Joe Bailey

Is your house unmortgageable? You may feel lost as to why. We lay out 10 reasons on what makes an unmortgageable property and how you can fix them.

Unmortgageable Property IssuesUnmortgageable Property Issues

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!

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.

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.

Red Flag #3: Based Close to a Commercial 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.

Red Flag #4: Short Leases

If you bought the property with a shorter lease length - let’s say anywhere below 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.

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

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 non-standard construction (including steel-framed, BISF houses) you’re going to have a hard time finding a mortgage lender for a buyer.

Picture of a steel-framed house

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.

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 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 or mining (which can cause subsidence) 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.

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.

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 property 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.

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.

Selling an unmortgageable property quickly

So those are the red flags that can cause an unmortgageable property. Before you put your house out there one the market, it’s usually essential that these massive problems (if any) be fixed on your property.

If you can't face the time, hassle, or expense but you still want a smooth sale, our service may be a great option. We aren't put off by these kinds of problems (we buy any home - issues and all). We can make you an offer within 2-3 days, and complete the sale within 2-3 weeks.

If you want to learn more, click that link above. Alternatively, hit one of those big blue "Get An Offer" buttons and enter your details. You'll have a chat with our team, and can decide if our service is the right option for you. (It's free and there's no obligation - so there's no harm done getting in touch).

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