Sometimes, mortgages are declined on the basis that they are considered unsuitable for mortgage security by some Lenders.
For prospective buyers looking for a mortgage, this is a big deal – but it’s also an issue for cash buyers, presuming they plan to sell their property in the future to others who may also be reliant on help from Lenders to secure their new home.
Guidance from Mortgage Lenders is provided to Surveyors inspecting a property about what they should report on – and it’s on this basis that a property may be declined mortgage funding, sometimes to the surprise of the would-be homeowner.
There’s a range of factors that prospective purchasers should be aware that may limit the future marketability of a property or increase the property’s potential to deemed unsuitable for mortgage security by a Lender. Here are just a few of them:
The Location of the Property
Where a property is located is an important consideration. Non-residential uses in the vicinity that could be considered to cause a nuisance by virtue of smell, noise or unsociable hours may be declined. This is especially relevant for flats that are located above non-residential uses (shops, restaurants, pubs etc.).
The Origin of the Property
The origin of the property within the public or private sector may also be of relevance, as well as any aspect such as shared ownership. A surveyor may be asked to decline a property if they have any concerns about future marketability in regard to these factors.
The Construction of the Property
Properties that have been altered may not be considered suitable security. Where there is evidence of non-conventional methods of construction (as opposed to traditional construction) in a property, Lenders may decline a mortgage. Also, properties with features such as single-skin brickwork/sub-standard walls may deter a Lender, even if this wall forms only a small part of the property. Other construction factors which may be relevant to a Lender’s determination of the mortgage security include properties where there is a ‘flying freehold’.
If the Property is a Flat
There are varying Lender-determining criteria for flats including the type of construction, number of floors in the block, whether the block was originally constructed for the public or private sector, whether the block was purpose built or converted and flats located in blocks that contain or are close to non-residential uses – to name but a few. With converted flats, factors such as the quality of conversion, layout and facilities as well as management arrangements for the block may determine whether the property is suitable for mortgage security.
Of course, the above list of conditions is not exhaustive, which is precisely why so it’s vital for prospective purchasers to ensure that the surveyor they choose to carry out their homebuyers report has a good understanding of Lender’s requirements.
To find out more about Mortgage Lender’s requirements or what to look for when viewing a property, get in touch with Hilltop Surveyors on 07932 907267 or email: firstname.lastname@example.org.