Unmortgageable house... (posting for traffic)

[PicturePerfectLife]

I posted in the property section but didn't get many responses and thought there would be more traffic here.

Ok, so I don't actually know if the house is unmortgageable or not yet and the agents haven't stated that it needs to be a cash buyer (they know I'm buying with a mortgage).

I'm a first time buyer and recently started looking again after a 2 year break. I had an offer accepted on a flat back in 2021 but the purchase fell through after 4 months due to it being unmortgageable (free holder and management company were both absent). It took months to actually find that out and boy was it stressful. Basically I was offered the mortgage, just not on that flat and ended up having to walk away. Anyway, I decided to take a break as prices shot up but I have decided it’s time to start looking again. After the last experience I’m definitely more cautious and keen to ask questions and know what I’m getting myself into.

I've seen a house that's been on the market since March, reduced twice and still not sold. It's a lovely 3 bed semi with loads of potential. Massive driveway that could easily fit 3 cars on there, big back garden, rooms are a good size in a lovely quiet area but it's had a dodgy looking extension built and the extension roof needs repairing. I haven't been to view it yet but went to see the outside and speak to the neighbours and it's a mess (overgrown garden, rubbish everywhere etc) but it could be made really nice. It’s been rented out for years apparently.

The extension roof has a tarpaulin over it so god knows what state it is in. The rest of the house and roof looks to be ok (new bathroom and kitchen put in) but when I spoke to the agent she said it hadn’t had a survey yet so no idea if there’s any underlying issues. They had some interest and a couple of low offers a while back but all been rejected but apparently the vendor is keen to sell and is willing to negotiate. The biggest worry is the EPC rating which is a G. There’s no gas in the village and the house doesn’t have any electric heaters, just a log burner. I know there are government grants that will help pay towards the work that’s required. I’ve spoken to my mortgage broker and apparently this can be an issue, as well as the repair work and essentially make the house unmortgageable.

I’m not concerned about the roof as my dad is a roofer and he has lots of friends who are plumbers, sparkies etc that can help but ultimately it’s not my decision and I’m at the mercy of the mortgage lender 🙄. My broker is going to look into over the weekend and give me a yes/no before I waste my time going to view it, but it seems such a shame that it might be unmortgageable, especially when these issues can be rectified.
Hopefully I’ll have an answer by Monday and all I can do is wait and see, but I just thought I’d come on here and see if anyone had any advice or knows what the likelihood is of it being unmortgageable?

Thank you!

Just looking to see if anyone else has been in this position before and what was the outcome.

Bump

Its unlikely to be outright unmortgagable, it might be that its not valued at the price you offer or that the price they want for it doesnt match. You might need a bigger deposit.

Properties that are unmortgable tend to be made of non standard materials or construction, or with massive subsidence or its on the edge of a cliff etc

Lots of houses that need work get sold with mortgages but with some caveats.

Whats the price and whats your deposit and what are local houses going for or have sold for nearby?

Also try going through a broker, as they'll be able to look for deals that can accommodate these circumstances. Mse recommends London and country and we've always found them good

If your deposit is big enough the lender may do a desktop valuation. This is sometimes the case even with a 10% deposit.

If a surveyor goes inside they may hold a retention. This could be a full retention until the work is done - effectively meaning you need to buy cash and then get a re inspection done when the work is complete, they then release the funds. Can parents help?

The broker cannot say yes/no definitively- so you may as well view it and look under the tarp as it’s down to the values comments. It’s unlikely they will lend if they discover the roof is damaged but not all are going into the house at the minute. So you could risk it but put your searches on hold.

Thanks for your message @bellac11

It's currently on for £128,000 (originally listed for 150k, reduced to 140 a month later and then again to it's current price)

House prices.io estimate it to be worth around £123,500 in good condition. According to rightmove the vendor bought it for 90k in 2007.

Depending on what work needs to be done I was thinking of offering around 110-115k. I have a healthy deposit but would like to keep some money back for repairs etc.

It may autovalue - your broker would find that out pretty quick post application. Are you using a whole of market broker or are you using the word broker meaning the advisor at the bank? Not being patronising just checking as sometimes people think the bank advisor is a broker.

Is the extension a main part of the house like the kitchen or back living room or bedrooms?

It might be valued as if it didnt have the extension

Could be leasehold with a short lease, may not have a kitchen or bathroom, have you called the EA to ask?

We only got a mortgage confirmed with the caveat that we replaced the 1930s roof within a year (we did it straight away anyway).

He's an independent broker @Fairymcclary

@bellac11 yes the extension is on the kitchen but no idea if the structure is ok (the agent said the roof needs repairing but it basically looks like it was never finished)

@Strawberryfieldsforeverrr it is freehold and it has a new kitchen and bathroom (no idea if their functional though)

Our mortgage (Halifax) only stipulated a kitchen and bathroom the rest of the mess was on us. Valuation was based on current condition not what it would be worth when finished unfortunately but we made it work and love the house. Good luck! Does it have oil btw? I would be careful how you do the survey I would go level one with the mortgage and take a builder privately to see the real problems 😉

Sorry @Fairymcclary I didn't answer your other question. My parents have already helped and gifted me most of my deposit. There is the possibility of lending me more to buy the house outright but I would need to make sure I could get a mortgage afterwards to pay them back...

Sounds like you need to spend a lot on it to get it in good condition - more than the price differences you’ve quoted.

But unmortgageable isn’t always a no, we did some work to our house before we bought it to make it pass lenders criteria. It was a calculated risk of course, but it worked.

It might be a little unusual but if the mortgage is dependent on the building being watertight, could you get your Dad to fix it and put in place a clawback for market rate of his labour and materials, plus the cost of the solicitor to draft it, in the event the vendor pulls out?

You need to make sure the extension is approved and has a building regs certificate too - our extension was built under permitted development, but we still have documents from the council to say they approved and the building inspector signed it off

Ah if your parents can give you the full amount if a retention is applied then tell your broker (call him to discuss don’t email back and forth as you want to view it) you can manage if the lender applies a full retention.

You have said your parents can help you buy outright. Wonderful.

get the place surveyed and find out what’s wrong with the place.

band g might mean single glazed windows, wrong type of light bulbs in the fittings the day the place was “tested” sometimes simple, inexpensive changes make all the difference.

but back to your parents buying the place, you do it up, hopefully the place will increase in value and you will get more equity in the property which will mean a much lower interest rate.

Good luck

How do you do work on a house you dont own?

I would look to see how much house prices have gone up since 2007 in your area. I bought my house then and I don’t think it’s worth much more than I paid then. Your offer might be too high?

@ScroogeMcDuckling well I haven't had the conversation with them yet. They could help but whether they would is another question. It's a lot of money and a big ask. I guess all I can do is wait to see what the broker says and take it from there. Thank you for your kind words 😊

What did your structural survey say, or has it not been done yet?

@mycoffeecup haven't had one. I've not even viewed the house yet (booked in to go next weekend) but just wanted to see if I could even get a mortgage on it first before wasting my time.

@Alwaysoneoddsock I've looked and the most recent sale was a house a few doors down in 2019 for £127,500. The house looked it much better condition though.

You are doing your homework which is good.

a few years ago, it was said a two bed terrace to modernise costs between £20,000 to £35,000.

I think it’s probably best to totally involve your parents on this one xx