Properties Mortgage Lenders Don't Like - What to Watch Out For

Properties Mortgage Lenders Don't Like – What to Watch Out For

Navigating the mortgage minefield of non-standard properties

Getting a mortgage can be tricky, especially if the property you're buying is considered "non-standard" by lenders. Some homes are seen as higher risk, making it harder to secure a loan, or even leading to higher interest rates.

If you're house hunting or considering an unusual property, here are the types of homes that mortgage lenders often view with caution—and what you can do about it.

1. Ex-Local Authority Flats & Houses

Many lenders are wary of former council properties, especially flats in high-rise blocks. Concerns include:

• Difficulty reselling if the property has a stigma.
• Restrictive lease terms (e.g., short leases or high service charges).
• Construction quality (some post-war builds have structural concerns).

Tip: Some specialist lenders will consider ex-council homes, but you may need a larger deposit.

2. High-Rise Flats (Especially Over 4 Storeys)

After the Grenfell Tower tragedy, lenders became more cautious about high-rise flats, particularly those with cladding issues. Even if cladding isn't a problem, some banks avoid tall blocks due to:

• Fire safety risks (EWS1 forms may be required).
• Higher service charges and maintenance costs.

Tip: Check if the building has an up-to-date fire safety certificate before making an offer.

3. Thatched Roof Properties

While charming, thatched roofs can be a red flag for lenders because:

• Higher insurance costs (fire risk).
• Maintenance expenses (re-thatching every 20-30 years).
• Limited resale market.

Tip: Specialist lenders and building insurers familiar with thatched properties can help.

4. Concrete & Non-Standard Construction Homes

Homes built with concrete, steel, or prefabricated materials (like Wimpey No-Fines or PRC houses) can be harder to mortgage because:

• Durability concerns (some degrade faster than brick).
• Difficult valuations (lenders worry about resale value).

Tip: Some lenders will approve these if the property has a structural warranty or has been certified as safe.

5. Flats Above Commercial Properties

Lenders often see these as risky due to:

• Noise and smell issues (e.g., above a restaurant or pub).
• Higher insurance costs (fire risks from businesses below).
• Potential difficulty reselling.

Tip: A bigger deposit (25%+) may improve your chances of approval.

6. Unusual or Unique Properties

From converted churches to houseboats, lenders prefer "standard" homes. Unusual properties may face:

• Valuation challenges (no comparable sales).
• Higher perceived risk (what if no one else wants to buy it?).

Tip: Specialist mortgage brokers can help find lenders open to unconventional homes.

7. Short-Lease Properties

If a lease has under 70-80 years left, lenders may refuse mortgages or demand a lease extension before approving.

• Costly extensions (freeholders can charge high premiums).
• Harder to sell as the lease shortens.

Tip: Check lease terms early—extending can be expensive but may be necessary.

8. Homes in Flood Risk Areas

Properties with a history of flooding can be harder and more expensive to insure, making lenders cautious.

Tip: Search the Environment Agency's flood map before buying.

Final Tips if You're Buying a 'Risky' Property

• Use a specialist broker – They know which lenders are more flexible.
• Save a bigger deposit – Reduces the lender's risk.
• Check lease/cladding status early – Avoid nasty surprises later.
• Consider the long-term resale value – Will others struggle to get a mortgage too?

Bottom Line

If you're set on a non-standard property, don't give up—just be prepared for extra hurdles. Research lenders, get expert advice, and factor in potential extra costs before committing.

Have you had trouble getting a mortgage on an unusual property? 

 There are specialist lenders out there who may be able to help!

Contact Patrick from Woolgar & Turner to see what options you have.