8 Types of Auction Properties That May Not Qualify for a Mortgage

If you’re looking to buy a property at auction with a mortgage, it’s important to know that not all properties are created equal. In fact, some may even be classified as ‘unmortgageable’. But don’t worry, we’re here to break down eight common types of auction properties that may not qualify for a mortgage.

1. A Property with No Kitchen or Bathroom

This may seem like a no-brainer, but a property without a functional kitchen or bathroom is often considered ‘uninhabitable’. These essential rooms are a must-have for any mortgage provider.

2. A Derelict Property

If a property has been abandoned or neglected for a lengthy period of time, it could be classified as derelict. This might raise red flags for mortgage providers due to potential hidden issues and repair costs.

3. A Property with Structural Issues

 Structural problems can make a property unsafe to live in. Whether it’s a cracked foundation, a damaged roof, or serious damp issues, a property with significant structural problems will likely struggle to secure a mortgage.

4. Short Leasehold Flats

 Mortgage providers generally prefer properties with at least seventy years remaining on the lease. Short leasehold flats (typically with seventy years or less remaining) can be harder to mortgage due to their decreasing value over time.

5. Low-Value Properties

 Properties with a purchase price or valuation below £50,000 can be difficult to mortgage. This is especially true for buy-to-let mortgages where the expected rental income may not cover the mortgage payments.

6. Properties with Lease Defects

 A property that has a defect within the lease, like an unreasonable doubling ground rent, forfeiture, or an absentee freeholder, could face mortgage issues. Such defects might affect the property’s value and potentially lead to legal complications.

7. Properties with Adverse Possession

 Adverse possession refers to properties with life tenancies at nil rent, regulated tenancies, assured tenancies, protected tenancies, sitting tenants or squatters. Such circumstances can complicate ownership and discourage mortgage lenders.

8. Non-Standard Construction Properties

 Properties of non-standard construction, such as those built with concrete, timber frames, or containing asbestos, might be viewed as high-risk. These construction methods can lead to higher maintenance and repair costs.

 
 
While this list provides a good starting point, remember that each lender will have their own set of requirements and products. So, not all of these factors will apply in every situation. But, being aware of these potential roadblocks can save you valuable time and energy in your property auction journey. So, go forth, bid confidently, and remember, knowledge is power!

Next up, read our guides on:

👉 How to buy a house at auction with a mortgage
👉 Property Auction Legal Packs: Top 3 Red Flags to Look For