Underpinned Property Mortgage

Underpinning strengthens a building's foundations to make it more secure. The process is commonly used when a building has subsidence when the ground underneath a building moves or sinks. Underpinning is a way to repair the foundations and support the building.

The soil moving within a building's foundations affects the structure's support. Once this support is weakened, the building may move and become unsafe. Underpinning is used to strengthen the structure. Underpinning may also be used to provide support if another storey is added as an extension to ensure the additional weight is supported. The most common types of houses that require underpinning are period properties which have old foundations.

Depending on the severity of the subsidence, some tell-tale signs that your house may need underpinning include small cracks appearing in walls and around doorframes and windows. Other signs to look out for include:

• Gaps in between window frames, doors and even bricks
• Stuck windows and doors that you cannot close
• Sloping floors

While old mining land, flooding, trees and poor ground condition can cause subsidence, not all structural damage is due to subsidence. It can also be caused by:

• The weight of the building causing soil compression, known as settlement
• Landslip or the downward movement of sloping ground
• Expansion of the soil

Underpinning a property can cost anything from £6,000 to £21,000. It largely depends on the extent of the problem and the amount of work required. If it's a large property or the situation is particularly complicated, you can expect the costs to be higher. There may also be additional costs to consider, such as replacing timbers and bricks that have been damaged subsidence or internal decorating costs.

It's estimated that underpinning could reduce a property's value by 20% to 25%. This will depend on the extent of the original issue, how long ago it happened, and the quality of the work. If the underpinning work happened some time ago and there's been no further issue of subsidence since then, it may not have any impact on the property's value. However, it's worth noting that properties become more stable when they've been underpinned and may be better protected against future subsidence issues. In theory, an underpinned property may be more stable than properties that have never experienced issues with subsidence.

While each borrower's circumstances are different, each lender also has different eligibility criteria for an underpinned property mortgage. However, two of the leading lenders for mortgages on underpinned houses are:

Natwest

Natwest will lend on properties underpinned within the last ten years. However, they’ll largely be guided by the structural engineer's report and the valuer's feedback. They also require specific building insurance.

Nationwide Building Society

Nationwide will approve mortgages on properties underpinned in the last ten years, but only if the work was part of an insurance claim and has the appropriate guarantees.

Approval for mortgages on houses of non-standard construction will largely depend on the type of construction. Certain properties are considered more reliable by lenders. For instance, some lenders will outright refuse to lend on houses of steel-framed construction, while others will only exclude particular types of steel frames. Your mortgage broker can advise you on which lenders are suitable for your particular property.

Some lenders will lend on underpinned properties for buy-to-let, but you may find the process more complex than getting a standard mortgage. For instance, your lender will want you to prove that the rental income from the property will be able to cover the mortgage, including during those periods when you don't have a tenant. To secure a mortgage, you must satisfy these requirements and the lender's underpinned property requirements.

Some insurance providers are wary of insuring properties that have been underpinned as it shows structural weakness. But, while your choice of an insurer may be more limited than if you were buying a property without underpinning, many providers certainly offer this type of cover. However, insurance on an underpinned property is likely to cost more.

Yes, you can sell an underpinned property. However, you must be transparent with your estate agent and potential buyers about the underpinning work the property has had. Failing to declare that your home has been underpinned could lead to legal issues as the buyer will be protected by The Misinterpretation Act of 1967. You'll also need to be prepared to take a drop in price as underpinning can devalue a property by up to 25%. However, not all buyers are put off by a property because of previous structural issues. But they’ll likely want to investigate the situation further with a structural survey.

Some properties are more at risk of having subsidence than others. Some of the common risk factors to look out for include:

Type of Soil

Clay soil is a common cause of subsidence problems as it tends to crack and shrink in warm, dry weather, causing the ground to be unstable and unsettle foundations. Look to see if there are any visible cracks in neighbouring properties and the one you’re considering buying. This will indicate whether there's clay soil in the area.

Trees Near the Property

Trees can drain moisture from the soil, making it dry, causing it to sink and causing instability under the property's foundations.

Period Properties

Older foundations are often shallower than new-build properties and at a higher risk of erosion and subsidence.

Water Damage

Leaking drains, previous issues with flooding or damaged water mains can soften the ground and increase the risk of a property having subsidence.

If the surveyor is satisfied with the quality of the underpinning and the work has resolved the issue, you shouldn't have too many problems getting a mortgage. It should be much the same as if you were getting a mortgage on a "non-underpinned" property. As with any mortgage, your credit history, income, size of your mortgage deposit, and affordability will all help to persuade a lender to approve your application.

If you have any questions about mortgages on underpinned properties, get in touch with our independent mortgage experts. At John Charcol, we have access to a huge range of mortgage products and lenders, including mortgages for underpinned properties. We can help you find the right mortgage for your circumstances. Contact us today on 0330 433 2927 or submit an online enquiry to find out more.