How To Get Finance To Buy An Uninhabitable Property

Updated: Jun 22




Are you thinking of buying an uninhabitable property for investment purposes? The property might be a unique opportunity where you can renovate or fix and sell, or it might be located in a fantastic area.


Either way, it’s difficult to get a mortgage via a traditional lender on an uninhabitable property and many lenders will require the works to be complete pre-purchase or for the monies to be retained.


Thankfully, there are options that you can use to make your goal achievable which we will cover below.


The following are covered:


What’s The Definition Of Uninhabitable?


What Might Make A Property Un-Mortgageable?


Does the Roof of My Property Impact my Mortgage Approval Chances?


What Are My Loan Alternatives For An Uninhabitable Property?


How Much Can I Borrow And What Will It Cost?


Can I Get a Mortgage After Repair Works Have Been Completed?


What is a Mortgage Retention Clause?


How Do I Apply?



What Is The Definition of Uninhabitable?


An estate agent might refer to the property as ‘in need of work’. But inhabitable goes beyond ‘tired’ or ‘needing some tender loving care'. Below are a few areas that can make a property uninhabitable.


  • If the property isn’t winded and waterproof

  • No kitchen or bathroom (or multiple, perhaps signalling a commercial setup)

  • Significant damp or mould issues likely to cause health risks

  • Staircases not possessing handrails that comply with building regulations

  • If the property cannot be made secure

  • Non-standard roofs

  • Contaminated Outside areas (Japanese knotweed and other issues)

  • And the real bogey man, asbestos.


The reasoning why there are many requirements is if a property isn’t ready to be lived in (by a buyer or a tenant), it will be difficult for a mortgage lender to sell at short notice if any reason the whole project fails, and they need to call in the loan.


What Might Make A Property Unmortgageable?


There are other factors that might make a mortgage unmortgageable (not strictly uninhabitable), and areas to look out for are:


  • A flat in a block above 6 storeys

  • A flat in a block with no lift

  • Property with more than one kitchen in a single residence. The reason being is that lenders may believe that you might let out a part of the dwelling which will make it more difficult to get vacant possession if they need to reclaim the property.

  • Cladding in a block of flats

  • A flat above a commercial premise

  • Some properties sold at auctions are in poor condition and have a light turnaround time


Does the Roof on My Property Impact my Mortgage Approval Chances?


It can do, yes.


Roofs made out of non-standard materials pose an issue for lenders since they usually cost much more to repair - that mitigates the saleable value of the property were they to end up in a repossession scenario


Some examples include:


  • Flat roofs are usually OK if they are on an extension, provided the rest of the property has a standard pitched roof. Lenders will assess an application depending on what proportion of the property has a flat roof.

  • Felt roofs are standard on listed buildings, and provided the felt is original, and in good condition, it is possible to find a mortgage.

  • Thatched roofs are another non-standard roofing material and will require a survey to assess the quality and maintenance of the roof. Some lenders will offer a mortgage but require full property insurance cover and paperwork to demonstrate that the maintenance programme is up to date.

  • Tin roofs are less common, and lenders will consider whether they are typical in the area and whether the property remains of saleable value.

  • Another non-standard roofing factor arises with solar panels. It is possible to get a mortgage with solar panels on the roof, although the lender will want to know who owns them. If the panels are leased or leased back to an energy provider, it may require a specialist lender.


Most mortgage providers will lend against a property with solar panels only if they are owned outright and not leased to a third party.


What Are My Loan Alternatives For An Uninhabitable Property?

Bridging finance is one of the most popular ways to get around mortgage issues with an uninhabitable property.


There are fewer eligibility requirements and provided there is a clear exit strategy by either refinancing to a longer Buy-To-Let term loan or selling this can be considered an attractive choice.


A bridging loan can run for usually between six months to a year while the renovation is completed.


This form of borrowing is also used to purchase auction properties, a standard sale method for uninhabitable homes.


Auction purchases are usually payable within 28 days, so a bridge loan is a much faster option than a typical mortgage.


How Much Can I Borrow And How Much Will It Cost?


This easy-to-use calculator will give you an indication of the costs of the Bridging loan including the gross loan amount that will need to be repaid at the end of the term.


Can I Get a Mortgage After Repair Works Have Been Completed?


Yes, you might find that a lender approves your application, but with the caveat that you need to rectify some issues within the property. Other options include secured loans, or short-term bridging finance to cover the costs, or as an alternative to a mortgage until the repairs are complete.


If a lender rejects your application for a mortgage on an uninhabitable property, you have other options including:

  • Pay for the work outright, potentially reducing the offer price with the seller to make up for the expense - and then apply for a mortgage.

  • Require the seller to carry out the work and possibly negotiate an increase in the sale price to account for the cost.

  • Accept a mortgage with a retention clause, where some of the funds are held back and released when the work is complete.

  • Take out a bridging loan to pay for the property and/or the repair works and remortgage on a typical home loan once finished.


What Is a Mortgage Retention Clause?


There are a few lenders that will approve a mortgage but release only a portion of the funds from the mortgage. This is called mortgage retention when the rest of the money lent will be released after the building work designated by the surveyor/valuer has been completed.


How Do I Apply?


There are more than 80 lenders in the market offering bridging loans -how much time have you got to compare terms and costs? You might be able to find bridging finance directly from a high street bank or building society. But they will only be able to give you details of their own loan products and not the whole market.


Some of the smaller, private lenders who can be more flexible in their loan decisions, and consider your loan application on its own merits, are only accessible via broker intermediaries such as Accelerated Finance.


Contact us at any time to arrange a no-charge discussion of the finance you need.




This article is intended to provide a general understanding of the topic. The contents should not be treated as advice.