Uninhabitable Property Mortgages
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What is a uninhabitable property?
An uninhabitable property is a property where people can’t live safely. This could be because the building is falling apart, there are dangerous things in the environment, or it’s not healthy to be there. It might also be because of legal problems. For example, a house that’s been badly damaged by something like a flood or fire would be unsafe to live in. These types of properties can possess great opportunities to those who seek them out and know what to do.
A property is considered uninhabitable if it doesn’t have things that people need, like hot running water, Kitchen, bathroom or the property may have mould issues.
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Can you get a mortgage on an ‘uninhabitable’ property?
Most mortgage lenders would not lend on a property if its uninhabitable. Lenders see these types of properties as high risk. The reason is because if for some reason they had to repossess the property because you were unable to pay the mortgage then the lender would find it difficult to sell the property in an uninhabitable condition.
You can however still obtain finance for these types of property. Short term bridging loans would be the most suitable product for you as bridging lenders will typically lend to you for a short term whilst you get the property up to a habitable condition and then you can exit the bridging loan through re financing onto a standard long term mortgage or you can sell the property. Have a read of our bridging loans page to find out more about bridging loans.
When purchasing abandoned or uninhabitable property, the buyer may be exempt from paying Stamp Duty Land Tax or may be entitled to a partial tax refund. Click here to find out more.
How is an uninhabitable property valued?
Most lenders will instruct a surveyor to value the property. Theres no exact science around the value the surveyor gives for the property. Most surveyors will look at comparable sales over the last 6 months with a close proximity of the property you are purchasing. Lenders will consider the fact the property is not habitable and will give a lower value.
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I have successfully assisted hundreds of people get their dream mortgage. With many years of experience as a Mortgage Broker. I have come across all types of clients who have trusted me to guide them through what can feel like a daunting process. I provide and lead my clients through this entire process with a precise, attention to every detail, in an effort to make sure their mortgage plans are being met with clarity and proficiency.
How much can I borrow to purchase a uninhabitable property?
Now that we have established that you will need a bridging loan to purchase an uninhabitable property, you may want to know how much you can borrow from the lender to purchase your property? Well most bridging lenders will want you put down 25% as a deposit if its for investment purposes and if its for you to live in the property then some lenders can allow you to put down 15% as a deposit. To understand how bridging finance works then please head over to our bridging loans page.
Can I get a mortgage more than what the property is worth?
Some bridging lenders will allow you to borrow over 100% of the property purchase price if you have other assets the lender could take a charge over. You must have enough equity in these assets in order for some lenders to consider offering a bridging loan more than what the property is worth.
If you need additional funds to carry out a refurbishment, then some lenders will lend up to 75% of the purchase price and 100% of the refurbishment cost. This will depend however on many factors. It’s best to speak to a mortgage broker to assess if you are eligible.
What kind of interest rates are available?
When considering interest rates it is important to note that they typically are higher compared to mortgage rates now that we have established that you will need a bridging loan for an uninhabitable property. The specific rate on offer will depend on your experience as an investor, your assets and liabilities and of course the property you are purchasing.
Bridging lenders commonly will have the below charging structure:
Serviced interest: Interest is paid monthly with the entire loan becoming due at the end of the loan term.
Retained: All interest and fees are added to the loan and you receive a NET amount of this figure subject to loan to value constrains. You then settle the full loan balance at the end and make no monthly payments.
How can we help?
Over the years we have helped many individuals and families. We provide advice and recommendations according to your circumstances when obtaining a mortgage. Our advisors assess your circumstances and then advise and recommend according to your needs.
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