How to Sell an Unmortgageable Property

Selling a property can be stressful enough, but trying to sell an unmortgageable property can be even more daunting. If your property is deemed unmortgageable, finding a buyer who can navigate the complexities and financial challenges can feel impossible.

But don’t worry! This guide will help you understand what makes a property unmortgageable and give you guidance on how to sell an unmortgageable property, ensuring you get a fair deal even in tricky situations.

Here is what you'll find in this blog:

1. What is an Unmortgageable Property?

2. What Makes a Property Unmortgageable?

3. How to Sell an Unmortgageable Property

   
   

What is an Unmortgageable Property?

First, let's define what we mean by an unmortgageable property. Simply put, an unmortgageable property is one that a mortgage lender is unwilling to finance. This can be due to various reasons, from structural damage to legal disputes, making it difficult for a traditional buyer to secure the loan necessary to buy your home.

Selling an unmortgageable property requires a different approach. While it may be impossible to sell to a typical home buyer with a mortgage, there are still a few options to explore.

What Makes a Property Unmortgageable?

There are several factors that can make a property unmortgageable. Understanding these issues will help you determine the best path for selling your home. Here are some common reasons why mortgage lenders often refuse to lend on certain properties:

1. Structural Issues

One of the most common reasons a property is deemed unmortgageable is because of structural problems. Properties suffering from subsidence (where the ground beneath the house sinks, causing the foundation to shift), severe cracks in walls, or poorly constructed extensions can all raise red flags for mortgage providers. These types of properties pose a risk to lenders because the cost of repairs can be extremely high, and in some cases, the house could even become uninhabitable.

If you suspect your property has structural issues, it’s a good idea to get a surveyor or structural engineer to assess the damage. Knowing the extent of the problem can help you decide whether it’s worth fixing or selling the property as-is.

2. Non-standard Construction

Some properties are built with unconventional materials and fall under the category of "non-standard construction." Homes made from concrete, timber frames, or even asbestos are difficult to sell through traditional mortgage routes. This is because lenders see these materials as risky due to potential maintenance issues or high costs for repairs.

The most common non standard construction properties can be split in 4 categories: 

• Metal framed

• Timber framed 

• Precast concrete 

• In-situ concrete 

  
  

Roofs can also have an effect on the construction type. Non standards roofs are:

• Flat roof

• Thatched roof

• Corrugated iron roof

• Shingle roof

Properties with non-standard construction might also struggle to meet modern building regulations, which further complicates the mortgage process. If your property was built using non-standard materials, selling to an investor or a cash buyer may be a more realistic option than trying to find a buyer who can secure a mortgage.

3. Unresolved Legal Disputes or Title Issues

If the legal ownership of a property is unclear or there are disputes regarding land boundaries, mortgage lenders will often refuse to finance the property. Title issues, such as missing deeds, can make it impossible for a lender to secure their interest in the property, making the investment too risky.

Similarly, properties that are tied up in legal disputes, whether it’s with neighbours or co-owners, will often be flagged as unmortgageable. If your property falls into this category, resolving these legal issues is the first step towards securing a traditional sale. 

4. Japanese Knotweed

Japanese Knotweed is an invasive plant that can cause significant structural damage to a property, and mortgage lenders are extremely cautious when it comes to properties affected by it. 

This fast-growing plant can penetrate concrete, brickwork, and even foundations, leading to costly repairs. Lenders often require proof that the knotweed is under control, with a treatment plan in place, before they will consider offering a mortgage. If a property has untreated or unmanaged Japanese Knotweed nearby, it is likely to be deemed unmortgageable.

5. Wood-boring Insect Infestation

A property with a serious wood-boring insect infestation, such as woodworm or termites, can also be considered unmortgageable. These pests can cause extensive damage to the timber structure of a home, compromising its safety and stability.

Mortgage lenders are reluctant to lend on properties with such infestations because the damage can be hidden and costly to repair.

6. Low-Value Property

In the UK, properties valued at less than £40,000 are typically considered low-value, and most mortgage lenders will not approve loans for such homes. In fact, many lenders require the property to be valued at at least £75,000 in order to offer lending on it. 

This is because the potential return on investment for lenders is too small to justify the risk. Low-value properties may include studio flats, small cottages, or homes in areas with depressed property markets. In these cases, selling to cash buyers or investors looking for affordable housing or rental investments is often the best option, as traditional buyers will struggle to secure financing.

7. Properties Above Commercial Units or Takeaways

Properties located directly above commercial units, particularly those above takeaways or shops with late-night hours, are often considered high-risk by mortgage lenders. The noise, smells, and potential for anti-social behaviour associated with commercial activity can make these properties undesirable to live in, and therefore harder to sell on the open market. 

Lenders may also view the fluctuating nature of the businesses below as a financial risk. As a result, these properties are often deemed unmortgageable, leaving sellers with limited options.

8. Short Leasehold Properties

For those investing in England, leasehold properties are very common. Properties with short leaseholds can be extremely difficult to sell to a mortgage buyer. In the UK, if the remaining term of a lease is less than 70 years, mortgage lenders tend to avoid financing the property. Lenders are concerned that the value of the property will drop significantly as the lease term gets shorter, and extending a lease can be expensive.

If you own a leasehold property with a short lease, extending the lease may be an option, but it can be costly. 

9. Environmental and Maintenance Issues

Properties located in flood zones, areas prone to subsidence, or those suffering from severe damp or contamination are often deemed unmortgageable. Lenders are wary of properties in high-risk areas because they may become uninhabitable or costly to insure.

Maintenance issues like damp and mould can also make a property unattractive to mortgage providers, as these problems suggest that the home has not been properly looked after and will require costly repairs.

How to Sell an Unmortgageable Property

Now that we’ve covered the main reasons a property may be classified as unmortgageable, let’s explore how you can still sell your home quickly and efficiently despite the challenges. Here are some practical solutions for homeowners stuck with an unmortgageable property. 

1. Sell to a Cash Buyer (Like us!) 

One of the fastest and easiest ways to sell an unmortgageable property is to sell it to a cash buyer. Cash buyers aren’t reliant on mortgage approvals, so the process of selling is quicker and more straightforward. At Express House Buyers Scotland, we specialise in purchasing distressed or unmortgageable properties. We understand the risks and costs associated with the sale and we are confident that we can buy your property no matter the situation. 

The biggest advantage of selling to a cash buyer is the speed of the transaction. In many cases, we can complete the sale in a matter of weeks, giving you fast access to funds and stress-free experience. 

See how we can help you sell your property. Fill in the details below and a member of our team will be in touch:

2. Sell at Auction

Selling your property at auction is another effective way to offload an unmortgageable home. Auctions attract cash buyers and investors who are looking for properties to renovate, redevelop, or flip for a profit. 

The process is relatively fast, and once the gavel falls, the buyer is legally committed to the purchase, often completing the sale within 28 days. However, auctions do carry some risk – if there’s little interest in your property, you may end up accepting a lower price than desired.

3. Renovate Before Selling

If you have the resources, renovating your property to fix the issues that make it unmortgageable could be a way to sell it on the open market for a higher price. 

For example, addressing structural problems, extending a lease, or making repairs to meet building regulations can turn your property into a more attractive option for mortgage buyers.

However, renovations can be costly, and there’s no guarantee that the improvements will increase the value of the property enough to cover the expenses. If you’re unsure whether renovation is the right option, consulting a property expert can help you weigh the pros and cons.

4. Be Transparent About the Property’s Condition

When selling an unmortgageable property, it’s important to be transparent with potential buyers about the issues that exist. This can help manage expectations and avoid complications later in the sale process. By being upfront, you’re more likely to attract serious cash buyers or investors who are already prepared to take on a property with challenges.

Selling an unmortgageable property doesn’t have to be an overwhelming experience. With the right support and experienced property professionals, you can sell your house with no hassle or stress. 

If you’re dealing with an unmortgageable property, contact us today for a free consultation. Our team specialises in helping homeowners just like you get a successful sale, no matter the condition of the property.

Let us help you turn a challenging situation into a successful outcome.