Inherited property "unmortgagable" advice

crazyoldmaurice

I've been trying to sell a property I inherited last year. It's a 1920's terraced property and is in quite poor condition in terms of nicotine staining, needing a total renovation. It needs central heating and rewiring. It does have a bathroom and kitchen though. The estate has a large council tax bill outstanding, around 12k, which would be cleared before completion 

It was valued at 150k in September. Went ahead with an offer of 145k. Buyer needed mortgage.

First lender said they wouldn't let on the property. I pushed the estate agent to find out why and he just kept saying that lenders are looking for any reason not to lend at the minute due to climate etc.

2nd lender came back willing to lend a little bit less so dropped price to 140k. This was in November 

Then towards end of the conveyancing process in January, I asked my solicitors what the hold up was etc and they informed me we were waiting for mortgage offer. How strange I thought. 

Turns out the lender retracted their offer but my estate agent failed to tell me this. He couldn't give me a proper reason for this either and just said the old "lenders are looking for any reason not to lend" again and told me that was all he knew. I would have pulled it at this point but they had already submitted another mortgage application with a different lender! 

So I've been waiting and not holding out much hope but praying it goes through (I am mentally exhausted from all of this and really struggling with complicated grief and a bit of depression I think) and lo and behold I have been told today that this 3rd lender won't give a mortgage due to the property condition.

The estate agent said he has seen houses in much worse condition than this get mortgages so can't really understand it. It needs a full renovation but is structurally sound. I don't think the buyer had a full survey done and just the one with the lender.

My estate agent is now talking about offering to cash buyers only and maybe going to auction but with the terrible communication I've had with them I'd be wanting to go to a different agent.

Does anyone have any recent insight to lenders deeming a house unmortgagable that would have previously been ok?

The estate agent was adamant the buyers finance was all fine and a house 2 doors down just sold with no issues so nothing outside the house. I'm just not 100% with the estate agent as he seems to avoid answering my questions and just chalks everything down to a sign of the times etc. 

Alderbank

The estate agent said he has seen houses in much worse condition than this get mortgages so can't really understand it.
Really?

Getting a mortgage is not just a simple yes/no.
The size of the borrower's deposit (their skin in the game), and LTV are very important, especially with a challenging property.

When I was a first-time buyer, with 10% deposit lenders were very fussy about the age and condition of properties I could buy. If I could raise 20%, many of those limitations would melt away

jonnydeppiwish!

Go to traditional auction - you’ll possibly get less but you’ll have a sale and moneyed within 6 weeks (iirc)

housebuyer143

Are you sure it's the property or the buyer? Lenders are not trying to get out of leading. They definitely want to lend to the right buyer and they wouldn't pull an offer once made unless something came up in the buyers finances or during due diligence on the legal side. 

Might be this buyer hasn't got enough capital to do the renervations and the lender isn't happy with that. I would definitely try again before writing it as unmortgable.
Nothing wrong with auction though if you want a quick sale.

mi-key

Do you know what the lenders surveyor valued the property at? It could be thy have downvalued it and the buyer can't come up with the difference and are trying to get a higher mortgage from another lender.

The buyers probably wouldn't tell the agent this, so they wouldn't know.

Lenders are lending on all sorts of properties every day, including ones that need a lot of work, so it is unlikely to be the house itself. The only properties they tend not to lend on are either ones that are uninhabitable, or have non standard construction.

If it were me I would relist with a different agent, and see who comes along. You could get a cash buyer, or someone who needs  mortgage but can actually afford it. 

MobileSaver

crazyoldmaurice said:

dropped price to 140k. This was in November ...  a house 2 doors down just sold with no issues

How much was the house two doors down on for and do you know what condition that one was in?

user1977

I would expect it to be fairly clear whether it was the valuer's comments on the property, or the lender's assessment of the borrower's circumstances, which was the problem.

Emily_Joy

I spoke to an EA recently about a property that was listed as "cash buyers only". I was told that the property is believed to have structural problems, since there was a subsidence claim and that it appears the money has not been used to fix the problem. 

crazyoldmaurice

Alderbank said:

The estate agent said he has seen houses in much worse condition than this get mortgages so can't really understand it.
Really?

Getting a mortgage is not just a simple yes/no.
The size of the borrower's deposit (their skin in the game), and LTV are very important, especially with a challenging property.

When I was a first-time buyer, with 10% deposit lenders were very fussy about the age and condition of properties I could buy. If I could raise 20%, many of those limitations would melt away

I just spoke to estate agents and he said from memory the buyer had 15% deposit with some savings to do the essential works on the property.

diystarter7

Hi

Auction route all day long or advertise cash buyers only at t a price that will sell it

Thnaks

crazyoldmaurice

housebuyer143 said:

Are you sure it's the property or the buyer? Lenders are not trying to get out of leading. They definitely want to lend to the right buyer and they wouldn't pull an offer once made unless something came up in the buyers finances or during due diligence on the legal side. 

Might be this buyer hasn't got enough capital to do the renervations and the lender isn't happy with that. I would definitely try again before writing it as unmortgable.
Nothing wrong with auction though if you want a quick sale.

The estate agent is pretty adamant the buyer has a perfect credit history and had around 15% deposit with some savings to do the essential works (rewiring, heating) but planned to live in the property for a few years before he flipped it.

I just spoke to estate agent and said that retracting an offer wouldn't be down to the condition as they wouldn't have made an offer at all surely. Be he is absolutely adamant the buyer had no changes in circumstance but can't offer me any further info.