Valuation report - lender won't lend

[harrietm87]

We've had an offer accepted on a fixer upper. It's a probate sale and the vendors (children of owner) stripped everything out (presumably to help sell it). It's a blank canvas - bare floorboards, new plaster walls throughout. The bathroom is fine but kitchen has been half removed, although there is a sink with running water (hot and cold). We had a building survey done which recommended re-wiring but otherwise fairly minor stuff, especially for a house of its age. We've got a 25% deposit and savings to do the work. Our mortgage valuation has come back valuing it at zero, recommending a couple of extra surveys (electrical- which don't need as will rewire) and saying the lender won't lend as it needs refurbished. But it is habitable now, we're planning on doing it up and the works needed are minor. What do we do now? Can we challenge this?

[Kiroro]

Cam you speak to the valuer? Might be able to tell you which 'but' it is that makes it non-lendable?

[WafflingVersatile]

You could go to a different lender or there's a type of mortgage that you can get where there are stipulations that you must complete certain works by a certain time. It's more expensive though as you might imagine.

[LizzieMacQueen]

Is there not something about if there's no working kitchen = not habitable = not mortgageable, or something like that.

But yes, have a word with your surveyor, ask them to communicate with the bank on your behalf.

[treaclesoda]

I used to work in this field and it was standard that a house without a working kitchen and bathroom was considered not suitable for mortgage. The reason is simply because in theory the lender needs to be able to re-sell it in its current condition if you should default on your payments.

Sometimes people were able to finance the initial purchase and work in a different way (eg bridging loans etc) and then re-finance as a mortgage once the work was complete, but that obviously depends on having access to quite a bit of money in the first place.

Different lenders might have options for this type of situation though. Maybe a broker could advise?

[namechangedtoday15]

Most lenders won't lend unless its habitable but they have different definitions of habitable. Maybe use a mortgage broker to look at other lenders / specialist renovation mortgages or even bridging finance (with a view to quickly remortgaging).

[InfiniteSheldon]

Wow I didn't know this bet the sellers are gutted they should have left it alone. Can you get them to put the basics back? If it has a bathroom surely just a sink and second hand cooker in the kitchen will do?

[goldangel]

I saw something on TV the other day with a couple in the same situation. They ended up investing £15k of their own money to get the bathroom, kitchen wiring etc sorted, mortgage company went back after and approved a mortgage, it was a huge risk but it paid off.

Would the vendors be able to do the improvements? I assume they want to sell it being probate?

[Gunpowder]

FIL is an architect, he's put in skeleton kitchens, bathrooms very cheaply (1-2K max) at his own expense to get a mortgage on properties like this. He says they usually require sink, cooker, loo, shower, elec, running water. but presumably each lender/surveyor has their own requirements.

He then completely guts them and redoes everything.

[harrietm87]

Thanks all. Yes it is frustrating - if the sellers had left it alone it probably would have been fine.

I've contacted surveyor and waiting for a response.

My understanding was that as long as there was a working sink in the kitchen (as there is here) that would be sufficient, but perhaps my lender has different requirements.

Vendors definitely want to sell quick. I'm hoping surveyor could at least tell me what needs to be done so we could negotiate with them about maybe doing some of it. Such a hassle and came as total shock to us.

[EssentialHummus]

Fingers crossed for a speedy response. As a PP said upthread there are refurbishment mortgages (though more expensive), or even bridging loans as an alternative.

[JT05]

If you do have to put in a quick kitchen, Wickes off the peg flat picks are incredibly cheap. We put in a temporary sink unit and a couple cupboards for a couple of hundred pounds.

[Kiroro]

Yes find out what your lenders reuqirments are, and then you can probably sort out getting it put in.

Something like the ikea mini kitchen with a mini oven and 2 ring plug in induction hob thing + mini fridge should satisfy the lenders 'kitchen' requirements for > £250.

For bathroom call some plumbers/bathroom fitters and see if any can supply and fit a 2nd hand suite cheaply (from one they are ripping out and disposing off for someone else!).

[HollySykes]

I'd ask the EA to speak to the Vendors about them putting in a basic kitchen (second hand eBay). Even if you drop out they'll have the same problem with anyone else unless they're a cash buyer. I wouldn't expect you to pay, your compromise is that you'll have to pay for a second mortgage val. I'm an EA.

[harrietm87]

Update - just had an email from the lender saying they won't lend on it as it requires "major refurbishment". Pretty unhelpful as I don't know what they mean by that! Our survey says it doesn't. I've asked them to clarify but feel like I'm into computer says no territory. This is so frustrating because it's our dream house and just needs a little tlc!

[namechangedtoday15]

Don't give up. Give London and Country a call (they're mortgage brokers - they don't charge you) to explain and see if they can assist.

[amistillsexy]

We've just changed our mortgage deal and needed a valuation survey for the new lender. The surveyor told me that, basically, all he was looking for was a 'fitted kitchen' and a functional bathroom. He had to send photos of each. I queried the 'fitted' part of the kitchen requirement, and asked if I'd be penalised if I had created a beautiful kitchen using freestanding old pine shop fittings (as is my long term plan). He didn't seem to understand what I meant, but said no, it had to be a 'proper' fitted kitchen.
He wasn't interested in the condition of the house, and didn't care about the wiring, plumbing or the fact that we've spent thousands on tanking the basement and reroofing. He didn't notice the massive cracks down one corner of the house (on all 4 floors ), and he said that it was a good job that the basement floor was solid, as anything else would go against us as potential for rising damp (he was standing on a floating floor 15inches above ground level). He missed the glaringly obvious flying freehold, where part of our house is carved out of next door's cellar, and that the shelving next to that have a piece of hardboard behind them...that fills in a doorway into next door's cellar, so we could potentially be in next door's house, and they in ours, armed with nothing but a blunt knife to prise out some panel pins.
The man was an absolute know-nothing plonker, and rude with it. He asked nothing about the house, and sneered at me dismissively when I tried to offer any information (so I stopped very quickly!)
Not saying that your guy was anything like my guy, HarrietM87, but mine didn't seem to know anything about old buildings, how they 'evolve', and he didn't really seem to be focussing on the right things, IMO.

The point of my hugely entertaining story is that, despite everything that I assumed a lender would want to know, all this guy seemed to be looking for to value the house was a fitted kitchen, working bathroom and square footage.

[harrietm87]

amistillsexy your post really made me laugh! Which is needed as I'm still in shock that a random nameless surveyor can derail our whole house purchase without giving any reasons! Our broker has suggested getting our surveyor to write a letter in response to his report.

I'm sure the kitchen thing was a factor, but I'm loathe to put one in without an indication from the lender that that was an issue, as they haven't even said they are willing to re-value it so could just be a waste of time and money!

[wowfudge]

So that particular lender won't lend on that condition of house by the sound of things. Until you've heard from their surveyor there's not a lot else you can do. You could ask them what they would view as indicators or needing major refurbishment - it could be a mistake for starters.