Unmortgageable property – what do you need to know?

How will I know that a house is unmortgageable?

If the property is unmortgageable due to a known issue, the property listing should state that it is ‘cash buyers only’. If, however, there are issues that are not known to the current owner, you may not find out until you get the results of the property survey.

What makes a property unmortgageable UK?

There may be several reasons why a property is considered unmortgageable.

How much less is an unmortgageable property worth?

It is estimated that an unmortgageable property is worth around 25-30% less than the same property in a mortgageable condition.

How to mortgage an unmortgaged house

It may be possible to improve an unmortgageable property to make it mortgageable. Whether this is an option will depend on the reason why the property is considered unmortgageable.

If your property is unmortgageable due to structural problems or an uninhabitable condition, you should be able to carry out the work required in order to apply for a mortgage.

If your property is unmortgageable because it has a short lease, it should be possible to apply for a lease extension, which would make the property mortgageable.

If, however, your property is unmortgageable due to non-standard construction, it may be more difficult to meet mortgage criteria.

Where can I find unmortgageable properties for sale?

If you have the means to buy with cash, buying an unmortgageable property can be a good way to get an affordable home.

The best place to look for an unmortgageable property for sale is at a property auction.

How to buy an unmortgageable house

If you want to buy an unmortgageable house, you’ll need to consider how you intend to pay for it.

If you think the property may be made mortgageable fairly quickly and easily, for example through property lease extension or by adding a new kitchen, you may be able to get a mortgage on it at a later date. In this instance, it may be possible to get a bridging loan to make up any financial shortfall. It’s important to consider that bridging unmortgageable properties is a very expensive way to fund a property purchase, however.

If the property will not easily be made mortgageable or if bridging finance is unaffordable, you’ll need to be able to pay for the entire property with cash funds.

Whether you are buying a property with a mortgage, bridging finance or cash funds, the legal process of conveyancing will be the same.

If you’re buying with cash funds, you will not be obligated to get a survey carried out at the property, but it would be very wise to do so. Issues identified in a property survey may dictate the property’s future mortgageability. This could impact your plans for the future.

Bridging unmortgageable properties

Whether you’ll be able to secure bridging finance will largely depend on how robust your plans are. The bridging finance provider will want a clear plan for when and how you intend to repay the borrowed funds. You’ll need to discuss your individual circumstances and the property details with a bridging finance company to find out whether it’s something they would be happy to lend against or not.

How to get a mortgage on an unmortgageable property

Mortgages for unmortgageable properties may be possible if the reason the property was unmortgageable has been addressed.

If you believe the property is now mortgageable, you should contact a mortgage advisor or mortgage broker to discuss your options.

Are sixth-floor flats unmortgageable?

It may be possible to get a mortgage for a sixth-floor flat, but any mortgage lender is likely to request a building safety certificate as part of the mortgage approval process.

What makes a kitchen unmortgageable?

A house will be considered uninhabitable, and therefore unmortgageable, if it does not have a functioning kitchen.

A ‘functioning’ kitchen should have:

• A working oven or hob
• Running hot and cold water
• A worktop or food preparation space
• Storage space (cupboards or shelves)
• Safe and compliant electrics
• Working electrical sockets

Why are concrete houses unmortgageable?

Properties that are of non-standard construction, eg. concrete houses, are difficult to mortgage. This is because prefabricated, post-war properties were only ever intended to provide temporary housing.

Whether or not it’s possible to get a mortgage on a concrete property will depend on the condition of the home and the individual mortgage company’s lending criteria.

If you’re interested in buying a concrete property, it is recommended that you speak to an independent mortgage advisor to discuss your options.

Does spray foam make a house unmortgageable?

Yes, spray foam can make a house unmortgageable.

Unfortunately, many homeowners have fallen prey to spray foam insulation companies who have used the products incorrectly or in unsuitable areas, and then found their properties unmortgageable when they’ve come to sell.

You can read more about spray foam insulation and how it can affect your property in our helpful guide.

What's the best way to sell unmortgageable property?

If you have an unmortgageable property that you need to sell, your best bet is likely to be taking it to auction.

Property auctions tend to attract experienced investors and cash buyers who are less likely to be put off by your property’s unmortgageable status.