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Buying an unmortgageable property

Some people will warn you that buying a property that you can’t get a mortgage on is madness.  If you listen to them you could be missing out on some great opportunities that may be unmortgageable – but are still very profitable!

Traditional lenders have a long list of types of property they won’t touch.  These include:

  • Derelict properties or properties that are in severe disrepair
  • Properties without a kitchen and bathroom
  • Properties that have more than one kitchen
  • Properties with structural defects, damp, mould, wet or dry rot, wall tie problems
  • Properties with Japanese Knotweed
  • Non-standard construction properties – like the Wimpey No-Fines homes built after WWII.
  • Properties where there’s a boundary dispute
  • A house to flats conversion that has been done without proper planning permission (or planning permission has been applied for after the fact)
  • Properties under £50K in value
  • Properties with fewer than 70 years remaining on the leasehold
  • Any property with a defective lease or with regulated tenancies (also known as sitting tenants)
  • If the property is near mining works, landfill or has a history of subsidence or recent flooding, the answer is almost certainly going to be ‘No’.
  • Vacant commercial property

Most of these are solvable problems.  Just because traditional mortgage lenders are ultra-conservative when it comes to agreeing a mortgage, doesn’t necessarily mean it’s a bad purchase.  The secret is in doing your homework first – and then solving the problem BEFORE looking for a mortgage.

The first step is to take a good look at the property and ask yourself four questions:

  1. What is the problem?
  2. Can you solve the problem?
  3. How much will it cost to solve the problem?
  4. How much will you add to the value of the property by solving the problem?

Don’t guess do your due diligence, so you are in possession of all the facts regarding the problem with no nasty shocks later on.

Now you can decide if it’s a good deal – or not.

Although no mortgage lender will lend on these properties, bridging lenders will.  Bridging finance gives you the ability to buy like a cash buyer, as they make decisions quickly and you can have the money in your bank in less than a month, (sometimes in days).

Remember one important fact – people who are selling unmortgageable properties usually KNOW they’re unmortgageable – and that usually means that only cash buyers will be interested.  In other words, they’ll be prepared to negotiate on price – with the right negotiating skills you can get amazing reductions on the asking price.

However, you don’t need a massive bank account – you just need to know how to use bridging finance effectively.


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