Securing a home loan can be a stressful task by itself, but are you aware that the kind of property you’re buying could wreck your odds of obtaining a loan?
From ex-local authority council housing to eco-homes, we reveal 16 properties you might find it difficult to obtain a residential mortgage on.
1) Ex-local authority housing
Ex-local authority housing could be financially attractive to buyers, because these properties are often less expensive than other homes around the open market.
Unfortunately, many lenders are unwilling to grant mortgages on ex-local authority housing since these homes are considered more prone to lose value with time.
Lenders can also be put off by these properties if they’re encompassed by a higher concentration of rented council houses (rather than owner-occupied properties).
2) High-rise flats
Lenders may won't grant a mortgage outright for homes over a certain level in high-rise flats. Criteria varies, but can range from the fourth to the twentieth floor.
This is due to the truth that historically, lenders have experienced concerns about high-rise properties being able to retain their value inside a downturn.
Mortgage providers will also be cautious about the fact that the quality of communal areas in high-rise properties are from the homeowner's control, meaning they’ll haven't much say over how they could affect the property's value in the future.
3) Properties made from concrete
The most of high rise concrete homes you see today were constructed within the sixties and seventies, and providers won’t usually grant a loan for houses made from non-standard materials like concrete.
Despite some being revered – like the Barbican complex in the Town of London containing a large number of high-value flats in addition to art galleries, schools and theatres – many lenders won’t offer a mortgage in it.
You may also find difficulty getting a mortgage on thatched properties or houses with wood and steel frames.
4) Flats above a shop or commercial premise
After the economic crisis, some lenders stopped offering mortgages on properties that were near any ‘high-risk’ commercial premises for example shops, restaurants and pubs.
This is because homes above commercial premises are in and the higher chances of being affected by such things as noise, smells, rubbish and security issues – that are beyond the owners’ control and may negatively impact the value of the property.
5) Properties with annexes or two kitchens
Properties with annexes or two kitchens often raise warning flags to lenders because they could see them as a sign which you may rent part of the property out, which would maintain breach of a residential mortgage.
If you do manage to secure a mortgage on this kind of property, it’s important to consider the council tax implications, which could make owning it much more expensive.
Guidance from the Valuation Offices Agencies mandates that you have to pay separate council tax to every 'building, or part of a building, that has been constructed or adapted for use separate living accommodation.'
6) Multi-unit blocks
A multi-unit block (or multiple unit block) is really a building that has a single freehold, which is occupied by multiple tenants who live independently of each other.
This might be a small block of flats or a Victorian house that was converted into flats. It is different from a flat or house share because each flat inside a multi-unit block is self-contained and no areas are shared between tenants.
Lenders are unlikely to allow a residential mortgage on this type of property because there is a risk which you may rent out part of the building, which would be in breach of the mortgage terms.
7) Live/work units
As the name might suggest, live/work units are properties made to permit you to live and be basics from which you run a company.
Lenders are often unwilling to grant mortgages on this property type because using these types of homes just for residential purposes isn't permitted and would breach the planning regulations.
If the neighborhood authority found a person in breach of these regulations, they could wind up charging you business rates and council tax rates too.
8) Studio flats
Due for their compact size and niche demand, studio flats are considered difficult to sell by many lenders and for that reason, you can find it difficult to obtain a loan for just one.
Most mortgage providers won’t grant financing for houses which are less than 30 m2 either, so properties that don’t meet this will be rejected for a loan too.
9) New-build or recently renovated properties
Mortgage providers are often stricter with the amount they'll give loan to people attempting to buy a new-build home.
This to enable them to protect themselves against devaluation from the property in early many years of ownership.
10) Properties with agricultural ties
An agricultural tie is really a planning condition or obligation that means that a house can only be occupied by somebody that works in agriculture or forestry.
Lenders won’t usually grant a home loan for properties with agricultural ties because they can be particularly difficult to sell and are often only sold at a discount.
11) Freehold flats
Historically, lenders have thought about freehold flats problematic for consumers.
This is a result of the truth that unless there's a legal agreement in force between your who owns the freehold flat and also the those who own adjacent properties there may well be huge problems later on in agreeing on structural repairs and their associated costs.
12) Properties with flying freeholds
A flying freehold is really a freehold that extends to part of a neighbouring freehold property, for instance, an overhanging balcony, garage, pathway, living room or loft.
Lenders have different methods to freehold properties – while some offer to lend depending on the size of the flying freehold in question, others may won't grant a loan altogether.
13) Flats with no property management company
Leasehold flats with no management company in place are often a no-go for mortgage brokers.
This is a result of the truth that communal spaces like hallways, lifts and refuse disposal unites my become neglected and produce on the value of the property, even if the flat is in good shape.
14) Properties with short leases
Short leases (ones which are 80 years or less) in many cases are hard to renew, which leads to the value of the property under consideration heading down.
Most lenders are reluctant to grant a home loan for properties with short leases as they possibly can be difficult to market.
15) Properties that aren't in a habitable condition
You’re unlikely to get a mortgage for a property that isn’t inside a habitable condition.
For many lenders, the minimum requirement for a house to be habitable is that it includes a usable kitchen, bathroom and watertight roof.
16) Eco-homes
While eco-homes are ideal for the environment, they are not well-liked by mainstream mortgage lenders.
Properties powered by a generator, or from the grid completely are of particular concern because they might be hard to sell.
As the planet gets to be more environmentally aware, greater numbers of people are adding eco-friendly elements to their homes – which could pose an issue for new buyers wanting to get a mortgage for them.
Is it impossible to get a mortgage of these property types?
When it comes to purchasing a home, most people are guided by the types of property they can afford rather than the kind of building it's.
If you are thinking about obtaining a property that falls into one of these simple categories, it’s vital to get just as much information in advance as you possibly can and seek expert guidance to provide you with the very best chance of securing a home loan.
David Blake which? Mortgage Advisers says: ‘If you’re buying a unique property, speak to a broker and acquire just as much information about the home as possible.
'For example, if you're buying an ex-local authority flat in a block of flats, you need to establish how many of the flats happen to be brought privately, as any mortgage company is likely to desire a healthy mixture of privately operated and native authority owned flats inside the block.
'Otherwise, it's very difficult for these to establish the interest in flats in the region if they needed to repossess.'
