Bank declined re-mortgage - flood risk - is my house now devalued

sarah90charl20

I have lived in my property 12 years, never experienced any flooding problems, nor expect to. However the environment agency has placed our postcode into flood zone 3. I have tried to apply for a remortgage with my current lender HSBC and it was declined saying this property isn’t suitable for a mortgage. If we were just trying to purchase this property now they wouldn’t give us any mortgage at all. However we have had a mortgage off them for the last 12 years. 

there’s also a new development being built behind my property of approximately 200 houses, which hasn’t yet started. But how can the council grant planning permission to the developer when they know this is an issue the home owners will face. It seems morally wrong! 

Apparently lenders have a new risk matrix which includes looking at the level of flood risk. Everywhere I’ve been reading online, I could try to get a mortgage elsewhere and there are brokers who help look at lenders who do offer mortgages on these areas with correct flood insurance. But I’ve also read it’s an emerging issue and I’m worried eventually it may become too expensive to insure or uninsurable, therefore leaving my property devalued and being unable to sell. I’m extremely devastated, I do not want to sell my property, but I’m worried about the future too. Has anyone experienced this or have any advice? 

Emmia

Were you actually remortgaging (borrowing more / changing the term)? Or just taking out a new fixed rate deal?

sarah90charl20

I was trying to borrow more, the affordability and credit check all passed. I have over 90k equity in my property so it wasn’t the loan to value either. They said it was just the new flood risk. 

I asked if I was just purchasing the property and it was a new mortgage what would happen. They said they wouldn’t have provided a mortgage.

So all outcomes are the same, no remortgage, no extending the term and no new mortgage. 

Emmia

I think all you can do, if HSBC won't offer the mortgage you want, is to go to speak to a broker to find an alternative lender.

As for selling in future, that's for another day.

MWT

Sorry to hear the situation you are in, and yes the lack ability to get a mortgage is obviously a concern and will affect property value as it effectively leaves you with only cash buyers.

It also means that in the future it is unlikely you would be able to get an equity release product either, so no ability to use the value of the property to support your income in old age or provide for care home fees.

I would suggest looking at the maps here: https://flood-map-for-planning.service.gov.uk/

.. both for your property and the area of new development behind you to see if there is any difference in the zoning and how close you are to a different zone...

RelievedSheff

sarah90charl20 said:

I have lived in my property 12 years, never experienced any flooding problems, nor expect to. However the environment agency has placed our postcode into flood zone 3. I have tried to apply for a remortgage with my current lender HSBC and it was declined saying this property isn’t suitable for a mortgage. If we were just trying to purchase this property now they wouldn’t give us any mortgage at all. However we have had a mortgage off them for the last 12 years. 

there’s also a new development being built behind my property of approximately 200 houses, which hasn’t yet started. But how can the council grant planning permission to the developer when they know this is an issue the home owners will face. It seems morally wrong! 

Apparently lenders have a new risk matrix which includes looking at the level of flood risk. Everywhere I’ve been reading online, I could try to get a mortgage elsewhere and there are brokers who help look at lenders who do offer mortgages on these areas with correct flood insurance. But I’ve also read it’s an emerging issue and I’m worried eventually it may become too expensive to insure or uninsurable, therefore leaving my property devalued and being unable to sell. I’m extremely devastated, I do not want to sell my property, but I’m worried about the future too. Has anyone experienced this or have any advice? 

The new development will be built with flood resilience measures if it is in a flood zone. They will be agreed as part of the planning process.

Doesn't help you of course in your situation.

The flood maps are constantly being updated.

bell2020

Following your post as we have a mortgage application in for a property that is apparently a flood risk with no history of flooding in the 30 years it’s been built. 

Hoenir

sarah90charl20 said:

 I have tried to apply for a remortgage with my current lender HSBC and it was declined saying this property isn’t suitable for a mortgage.

What's the purpose of the remortgage. To release equity? 

Typhoon2000

There has to it than just being in Flood Zone 3. Large swaths of prime London property is in Flood Zone 3 due to the Thames and I haven’t heard property in Richmond, Fulham, Westminster, St James Park, Battersea, Victoria, London Bridge and Canary Wharf being unmortgagable.