If you're looking to get on the property ladder or are an experienced investor, an uninhabitable "fixer-upper" property may be tempting.

For some people, fixer-uppers offer an affordable way to achieve their dream home. But can you get a mortgage on an uninhabitable property? Here we'll walk you through getting a mortgage on an uninhabitable property, how the mortgages for these properties compare to standard mortgages and the potential challenges you may face.

What Do Mortgage Lenders Consider an Uninhabitable Property?

Most lenders will agree that a property doesn't have to be in pristine condition to be considered habitable, but it must be warm, dry, safe, secure and meet the following basic requirements:

  • Has electricity and central healing
  • Complies with building regulations
  • Is windproof and watertight, and the roof is in good repair
  • Has a basic working kitchen
  • Has a basic functional indoor bathroom with a toilet
  • Has Secure ground floor windows and external doors
  • Is free of damp, mould, asbestos and vermin

Mortgage lenders will refuse to lend on a property they don’t consider habitable. Even if you think the property is liveable, the lender may disagree based on the survey findings. They could decide that essential building and repair work is required before they will consider approving a mortgage on the property. However, once the repair work is completed, the property should be eligible for a mortgage.

How Can I Get a Mortgage on an Uninhabitable Property?

In order to get a mortgage on an uninhabitable property, you’ll first need to make it habitable. To do this, you’ll need to repair the issues that are stopping mortgage lenders from using it as security.

Here’s what you can do.

Identify the Property's Issues

If you’ve already had your mortgage application refused, you can ask the lender why they considered it uninhabitable. It may be something obvious and easily rectified, such as mild signs of subsidence or damp.

If the lender flags issues to you that need further investigation or you suspect there might issues with a property you haven’t had a valuation on yet, you may want to consider arranging and paying for a homebuyer’s report or full structural survey on the property as this will give you information about what needs to be done and the potential cost.

Assess Whether You Can Repair the Issues

After arranging for a full structural survey to be carried out on the property, you’ll have information on what work the property needs to make it habitable. You can use this information to judge whether this a project you’ll be able to undertake or if it’s better to look for an alternative property.

If you decide to repair the issues with the property, then you’ll want to speak to a mortgage broker about your lending options. We go through your options in the section below.

In some circumstances, you may want to ask the seller if they would be prepared to make the appropriate repairs to the property. Once the repairs are completed, you can resubmit your mortgage application or begin a new application.

Speak to an Independent Mortgage Adviser About Lending Options

If you intend to have work carried out on an uninhabitable property to make it habitable – and therefore mortgageable - it's a good idea to speak to an independent mortgage adviser at John Charcol about your finance options.

We'll be able to help you find a suitable solution to fund your property purchase, such as:

  • Bridging finance: bridging loans are a type of short term finance that are quick to arrange. They’re more expensive than typical mortgages but they’re a way to get the cash to purchase an uninhabitable property and fix it up. Once the work is completed and the property is habitable, you can remortgage onto a normal product
  • Remortgage: if you own your home and are approaching the end of your fixed term or the property is unencumbered you may want consider remortgaging and release equity from your property to use as cash to buy the onward purchase and make it habitable
  • Second Charge Mortgage: if you own your home and want to buy an uninhabitable property, you may want to consider a second charge mortgage, secured on your existing home to release funds
  • Development Finance: if you want to develop a property to sell onwards like a block of flats, you may be eligible for development finance which is where a lender lends you money to purchase the property and land and build the development

Can I Get a Mortgage on a House Without a Bathroom or Kitchen?

Most lenders won't offer a mortgage on a property that doesn't have a functioning kitchen or bathroom facilities, which is why you’ll typically require specialist finance such as bridging. You may also struggle to get a mortgage if the property isn't secure, weatherproof or self-contained, as these put the property at a higher risk which could impact their resale value. These issues may also affect your ability to get building insurance, which you need for any homeownership.

Can I Get a Mortgage on a Listed Building That's Uninhabitable?

A listed building that is uninhabitable is even more complicated to get a mortgage on. Whether a lender will accept this type of property will depend on their criteria. Any restoration work that needs to be carried out on a listed building must be in keeping with the existing materials and appearance of the property while being carried out by specialist restorers. It's a good idea to get advice from an independent mortgage broker to help you find the best lending solution.

Are Mortgages Available on Properties with Asbestos?

Until the 1990s, it was common for asbestos to be used in properties across the UK. Over time, it has become clear that asbestos can pose a serious issue for health reasons and can be very expensive to remove.

Despite this, asbestos can be removed fairly quickly and safely by an expert. Mortgage lenders will require an asbestos report from an accredited surveyor to determine if the asbestos poses a risk. If it's determined that the asbestos should be removed, the lender will consider the surveyor's findings and recommendations before deciding whether or not to make a mortgage offer. Asbestos roofs aren't usually a significant problem if the roof is generally in good condition and doesn't require any repairs.

Does the Property Need to Be Weatherproof for a Mortgage?

To get a mortgage on an uninhabitable house, the property must be weatherproof and secure. If a leaking roof causes damage, the lender may consider the property too great a risk and reject your mortgage application. You may also struggle to get building insurance, which is a mandatory requirement for all lenders. This could result in either extremely high premiums or you have to buy the property outright in cash.

Can I Get a Mortgage After Repairs Are Completed?

You should be able to remortgage onto a normal mortgage product once the repairs are completed.

If the lender rejects your mortgage application on an uninhabitable property, you can consider:

  • Paying for the work outright (you may consider asking the seller to reduce their asking price to make up for the repair costs) and then apply for a mortgage
  • Requesting that the seller carries out the repair work and negotiate an increase in the sale price of the property to cover the additional cost
  • Getting a bridging loan to pay for the house and/or the repairs and then remortgage onto a traditional residential mortgage once the work is completed

Can I Use a Second Charge Mortgage to Buy an Uninhabitable Property?

You can use a second mortgage to purchase an uninhabitable property, by releasing equity in a property you already own. A second charge mortgage is a type of loan secured against  your existing property. It’s separate from you existing mortgage, otherwise known as a first charge. Depending on how much equity you have in your existing property, you may be able to raise enough to purchase the property and cover the repair costs. Once the property is of a good enough standard, you can then look at remortgaging the former uninhabitable property in the usual way.

Can I Use Bridging Finance to Purchase an Uninhabitable Property?

Bridging finance is a great option for purchasing an uninhabitable property. Bridging lenders charge higher rates and require bigger deposits to make up for the risk they’re undertaking by lending on an uninhabitable property. Bridging is a short term solution – you typically take out the loan to purchase and carry out work on the property, then once the work is completed, you remortgage onto a normal mortgage product or sell the property. You typically take out a bridging loan for 6 – 12 months, during which you repair or develop the property.

Bridging Loans

Can You Get a Mortgage on an Uninhabitable Property if You've Previously Been Refused?

Even if your mortgage application has been declined before, you can still get finance. The options available to you include:

  • Submit a mortgage application to a different lender who may view the habitability issues more favourably
  • Apply for an alternative form of financing such as bridging to buy the property and complete the repair work then remortgage with a new lender

If you require specialist finance for an uninhabitable property you’ll need to use a mortgage broker like John Charcol.

Mortgages on Uninhabitable Properties: The Bottom Line

Transforming a dilapidated building into a beautiful and liveable modern home may seem appealing, but the reality of getting a mortgage on an uninhabitable property should not be taken lightly. You’ll likely require specialist finance in order to purchase the property and carry out any necessary work.

Fortunately, John Charcol is there to help. If you’re looking to buy a property that might be deemed uninhabitable and want to review your mortgage and finance options, speak to our team of independent advisers at John Charcol.

We have access to an extensive range of mainstream and specialist mortgage products, including those for uninhabitable and derelict properties. Get in touch with us today on 0330 433 2927 or submit an online enquiry.

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