Mail On Sunday – By Neil Simpson
Most lenders have informal lists of property types they reject for mortgages. Banks justify this by saying they fear the properties in question will be hard to sell if they are repossessed. But it’s hard to know which properties are on these lists. If you apply to the wrong bank and get rejected, it can ruin your credit score. Here are the homes to worry about.
BRAND NEW PROPERTIES
Banks think new homes are over-valued, lose value faster than older homes in a down turn and are harder to sell in a crisis. So while they may offer loans, most lenders restrict how much they will advance. Santander lets home-movers borrow up to 90% of the value of existing homes, but wants 20%deposits if you are buying a new house or 30% for a new flat.
HOUSES ON FLOOD PLAINS
The key issue is insurance, not mortgages. If you can’t get a policy to protect the house, then no bank will lend you money to buy it. Asking the vendor who they insure with and keeping that policy running is the best option. Or try the British Insurance Brokers Association at www.biba.org.uk . Prove you can get a policy and lenders should treat applications more favourably.