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Any homeowners who have been trying to sell their flats or houses and have been told the properties are unmortgageable should carefully read the below guide. It provides an overview of the many different reasons why homes might be considered unmortgageable, an explanation of why they are harder to sell, and advice on ways to still secure speedy sales for the properties.
- What is an unmortgageable property?
- Why is it harder to sell a home considered to be unmortgageable?
- Top 11 reasons why a property might be unmortgageable
- Options for selling an unmortgageable house or flat
- Top queries and answers about selling an unmortgageable property
What is an unmortgageable property?
There can be many reasons why your home isn’t selling, ranging from factors outside your control such as a slump in demand for properties through to issues you can fix, such as having cluttered rooms when people come to see the home on estate agent viewings.
But one of the biggest issues that can prevent your house or flat from attracting any offers is when the property is deemed to be unmortgageable. This is typically when a mortgage company has identified an issue with the home which means it does not want to lend a potential buyer money to cover the purchase of the property, which naturally complicates the sale of the home.
The average mortgage value for first-time home buyers in July 2021 is £198,800 according to Statista, a consumer and market data company. That’s a significant financial risk for any mortgage lender or bank to take on a home that might have a major problem that raises questions about the loan’s long-term security.
Still, it’s important to note that defining a property as unmortgageable is solely a decision by individual lenders. Just because one financial provider might have deemed your home to be unmortgageable, a potential buyer could approach another lender and be able to get a mortgage for the same property. Therefore defining a home as unmortgageable is a rather subjective process, but one that has major implications for your ability to sell your property.
Why is it harder to sell a home considered to be unmortgageable?
As the HomeOwners Alliance, an independent organisation which represents the interests of UK homeowners, notes on its website, mortgages are typically central to a successful home sale: buyers will need a mortgage to purchase your home, and as a seller you will most likely need to obtain a mortgage to cover the cost of buying your next house or flat.
Mortgages generally last for at least 25 years or longer, and therefore they are a very long-term investment decision by a bank or other financial lender. They want to know that the loan, including its repayments, will be secure for the duration of the mortgage.
If you are trying to sell your home and it is considered unmortgageable then the buyer’s financial provider has decided that, after assessing your property, it is not worth the risk their investment. Should you find yourself in this situation, don’t despair because it does not mean that you will never be able to sell your home. It just might require an alternative way of finding a buyer.
For example, you might be approached by a buyer who is willing to meet a serious of strict conditions in order to qualify for a mortgage for your property, such as placing a much larger deposit of 20 percent or greater of the final sale price, or paying an elevated loan interest rate. However, many potential buyers are unlikely to want to, or be able to, meet these strict terms.
And you might even have to cover certain costs for the buyer if you are determined to help them secure a loan for your unmortgaged property. For example, you might have to plan for paying the fees for various building surveys that the mortgage company might request so that they can get an independent professional’s review of a negative issues that they have identified.
Top 11 reasons why a property might be unmortgageable
Whether you own a house or flat, and whether it is freehold or leasehold, there are many reasons why a lender might deem the home to be unmortgageable. Some of these issues could potentially be fixed if you invest some time and money, whereas others might not be possible for you to correct.
Below you will find the 11 top reasons for why a home might be deemed to be unmortgageable, as well as information on whether a relatively simple fix could be possible for the property. But your individual situation — including the amount of time and money you have available for addressing any flaws with your home — could differ from the general reasons listed.
The home lacks a bathroom or a kitchen
Many buyers consider a kitchen and a bathroom to be essential components of any home that they intend to buy, and mortgage lenders have the same thought. They are likely to deem a property without either of these rooms to be unmortgageable. But if you own the home and have the time and money to install a kitchen and/or bathroom it can be a way to fix this problem.
The home is dilapidated or otherwise cannot be lived in
Even if you find someone that is willing to buy a dilapidated property in which no-one can actually live, the buyer will struggle to find a bank willing to provide the mortgage to pay for the home. This is a very serious problem with a property and will likely require using other methods of selling, for example using a quick home buyer such as LDN Properties.
The home has the presence of Japanese knotweed
Japanese knotweed is an invasive species that, if left untreated, can infest homes and cause structural integrity problems. If it’s present on a large scale at a property then a mortgage lender might consider the home to be unmortgageable. You could consider spending money to tear out the Japanese knotweed and prevent it recurring, but this is a very expensive process.
The home is built from a non-standard construction material
Some mortgage lenders will not provide loans for buyers to purchase properties that are built of non-standard construction materials, such as concrete or timber. This can be for a number of reasons, including that the home might be harder to resell in the future, or might be less structurally sound than a property that was built using standard construction material.
The home has structural problems
Structural problems at a property can cover a wide range of issues including subsidence, dry rot, wet rot, severe damp, repeat flooding and many more situations, and can be the reason a property is designated unmortgageable. If that’s the case you need to decide between investing in fixing the issue if possible, or finding another way to quickly sell the property.
The home lacks building regulations or planning permissions
Mortgage lenders do not want to provide loans to buyers for properties that legal issues such as a lack of required planning permission or necessary building regulations. If you are trying to sell a home in this situation you will have to review whether you can address the problems and try to make it mortgageable, or try to sell elsewhere such as contacting a fast home buyer.
The home is leasehold and has a short lease remaining
Another reason why your home might be deemed unmortgageable is if you own a freehold property that has a very short amount of time remaining on the lease. Such homes are not considered very desirable, and so if your home has a short lease — typically meaning one with less than 70 years remaining — your buyer might find it difficult to obtain a mortgage.
The home has not been registered with HM Land Registry
HM Land Registry is a non-ministerial division of the UK government that registers the ownership of land and homes in England and Wales. If your house or flat is not registered, mortgage lenders will be wary of providing a loan to buy the property because the home’s true ownership will be in doubt.
The home is a flat in a high-rise building or tower block
Mortgage lenders and banks are often reluctant to provide loans for buyers who would like to purchase homes that are in flat tower blocks or high-rise buildings, particularly for any flat that is above the fifth storey. If you own such a home, you have no options to relocate it, and will have to consider alternative means of selling including contacting a speedy property buyer.
The home is priced at a very low value
It might seem counterintuitive, but some mortgage lenders will not provide loans to buy homes if their value is £50,000 or less, because they are not likely to make much money off interest or to secure lengthy repayment terms. Should you find yourself in this situation then you might want to consider raising the value of your home so long as that will not deter future buyers.
The home is part of a commercial building
Another reason why financial providers might consider a home to be unmortgageable is if it’s part of a commercial property, for example a residential flat above a shop. There is nothing the homeowner can do to change this situation, but they might be able to still sell fast at a fair price if they contact a quick home buying company with expertise in buying such flats.
Options for selling an unmortgageable house or flat
Do not panic if you own a home that a financial provider has determined to be unmortgageable. It simply means that one mortgage company has opted against providing one buyer the necessary loan to cover the costs of whatever offer they wanted to make to buy your home. Instead, shift your attention to your options for trying again to find a buyer for the property.
Selling an unmortgageable home through a property auction
Some homeowners like to try their luck with a property auction, where they hope to get a lot of people interested in buying their house or flat. The aim is to have many people seeking to outbid each other by offering ever-increasing prices to buy the home, ideally pushing the final sale price significantly about what the homeowner or auctioneer might have thought possible.
However, this approach to selling can be uncertain as there is no guarantee that the auction will lead to competitive bidding and a great sale price. Your home might not get any bids, in which case it doesn’t sell. Or you might only receive the opening minimum reserve price bid, which is generally set at a level lower than most homeowners would like, and done so to lure more buyers into looking at the property with an eye to potentially bidding on it. Be sure that your home moving budget can afford an auction where you sell at the opening reserve bid price.
And if your home is unmortgageable it might face reduced chances of selling at an auction, depending on what the issue is that caused the lender to reject the loan application. Identify what the issue with your home is and ask auctioneers whether they have successfully sold such properties in the past. If they have, then they might know how to attract a buyer for your home. If they have not, they might fail to generate any interest from buyers when the auction happens.
Still, homeowners that have successfully sold their properties at auction appreciate the relative certainty of selling via this method compared to an estate agent. The date of the auction tells you when your home might sell, and if you do receive even just one bid on your home then that is considered to be a legally binding agreement to buy your property and you can enforce it.
Yet you might also have some delays with selling your home this way, including a potential delay of a few weeks between when you enter your property for sale and when the actual auction takes place. If your home sells, you can also expect some further delays until all of the mandatory legal documents for selling your home can be fully completed.
And auctioneers will charge you fees for selling your home that will reduce your total sale profit, although you might be able to make the winning high bidder pay these costs.
Selling an unmortgageable home through an estate agent
Another option for selling your home is contacting an estate agent, who will put together a listing with text that describes the various features of your home, along with photographs that aim to portray the interior and exterior at their best. The estate agent will advertise this listing in local newspapers, online and elsewhere and hopefully generate interest from potential buyers.
If someone is possibly interested in buying your home, they will most likely visit it on a viewing organised and hosted by the estate agent. During viewings, the estate agent takes the visitors on a tour of the home in a bid to convince them to make an offer. Some homeowners have said that they find these frequent viewings to be inconvenient and time-consuming for them.
The problem with using an estate agent for an unmortgageable home is that, depending on the issue with the property, they might not know how to sell it. For example, if your home has been deemed unmortgageable because it is dilapidated, you will have to find an estate agent that has experience with selling dilapidated properties. Otherwise, a regular estate agent without experience of such sales will not know the steps to take to find a buyer for your home.
Should an estate agent manage to secure a sale for your home, you will have to pay them potentially significant fees for their work. You’ll have to deduct this commission from the final sale price in order to know precisely how much profit you will make from selling your home.
Another drawback of selling your house or flat through an estate agent is the fact that you don’t know when your home might sell. It’s possible that your house is in high demand and that you receive a legitimate offer within weeks, but you might also be waiting for many months or more. That can be problematic if your goal is to find a buyer for the home in just a few weeks.
Selling an unmortgageable home using a fast buyer like LDN Properties
LDN Properties, launched in 2003, is always happy to talk with people in and around London who are looking to sell their houses or flats fast. We provide a streamlined and straightforward way to get competitive and speedy offers for selling all types of freehold and leasehold homes, including those properties for which a mortgage company has refused to provide a buyer a loan. If you have an unmortgageable home, contact us to discuss selling it as fast as possible.
Some of the many homes that have been deemed unmortgageable that we have experience with include properties built from non-standard construction material such as concrete, houses where there is a major infestation of Japanese knotweed, dilapidated homes, properties situated near airports or railways, flats with cladding, houses with missing planning permission, and more.
The next step, if you accept our offer, is for one of our representatives to come to your home so that they can see the interior and exterior in person before we calculate our final competitive offer for buying the property. If you have any remaining questions about the process of selling your house or flat to a quick home buyer, you can ask our team member during their visit.
If you accept our final offer, you solicitor will work with us to complete the required legal paperwork for us to buy your home. Within a handful of weeks after you first contact us, we can usually finalise the process, including exchanging contracts and paying the proceeds to you.
And remember that LDN Properties never charges homeowners any fees for selling their houses or flats to us, because we believe people should never have to pay money when finding a buyer for their homes. That means you are guaranteed the full profit from our final offer, compared to estate agents and auctioneers whose fees will reduce your total sale profit.
Questions and answers about selling an unmortgageable house
Homeowners looking to sell their house fast often have a range of questions for us, ranging from how many weeks it takes to sell their house to us through to specific queries about selling an unmortgageable house. Here are some of the main questions we are asked about selling an unmortgageable property:
Your questions answered when selling an unmortgageable house
Because buyers typically need to get a large mortgage loan from a financial provider in order to cover the costs of purchasing properties. If they are interested in making an offer on your home but cannot secure the mortgage to pay for it, the sale cannot go through. If this happens then you will have to consider alternative methods of selling, like using a quick home buyer.
This is certainly an option because it would reduce the amount of loan required to buy it, although you will likely have to significantly reduce the sale price by many thousands of pounds before a lender would reconsider their decision to deem it unmortgageable. And a major cut to the sale price of your home will mean a massive drop in how much profit you could make from selling.
No. Some issues that make a home unmortgageable can be fixed relatively easily, for example if a house lacks a bathroom, then the owner could spend money to install one and then try again to sell the property. Other problems, such as an uninhabitable home, aren’t easy to fix, and the best way to sell those might be to use a fast property buyer such as LDN Properties.
This depends on your particular circumstances, time and money. If you can afford to invest in correcting an issue that a lender has said makes your home unmortgageable, you might want to do that because it could potentially increase the property’s value and make it quality for a mortgage. However, this is not something that every homeowner will be able to consider doing.
No. If you contact LDN Properties to sell your unmortgageable home we’ll be able to make a speedy and competitive offer and complete the purchase of your property within weeks, and without charging you any fees. By contrast, you will have to pay commission if you successfully manage to sell your unmortgageable home through an auctioneer or estate agent.
It depends on how you plan to sell your home. If you use an estate agent you might be waiting for many months or even longer to find a buyer for your unmortgageable property. An auction might be quick and take a few months. And selling to LDN Properties is even faster because we aim to finalise the purchase of each home that we buy all within a few short weeks.
