How to Finance the Purchase of an Uninhabitable Property

For house-flippers and investors with an eye for a bargain, the right type of uninhabitable home can be an untapped goldmine. The more extensive the repairs and renovations required to bring it up to a liveable standard, the bigger the potential profits on the cards.

Unfortunately, the vast majority of major mortgage providers do not see things this way. Irrespective of the potential an uninhabitable property may have, qualifying for a conventional mortgage in such circumstances is practically impossible.

Even if you present a full disclosure of your future plans for the property, your application will not even get through the door.

What is the Definition of an Uninhabitable Property?

Uninhabitable properties, aka unmortgageable properties, are those that do not meet a lender’s basic criteria with respect to their condition and state of repair.

For example, most conventional lenders will refuse to issue mortgages for the purchase of properties, unless they are:

  • Watertight – i.e. with a roof in a good state of repair
  • Equipped with at least a basic kitchen and bathroom
  • Have a functional central heating system
  • Are electrically wired safely
  • Offer a basic level of warmth, comfort and security

All of which creates issues for those looking to flip uninhabitable properties for profit, which by their nature may not meet all (or any) of the above requirements. This is why investors have no choice but to set their sights on funding solutions away from the High Street, where conventional property loans and mortgages are out of the question.

What Are the Options Available for Buying an Uninhabitable Property?

There are various options available for funding the purchase of an uninhabitable property, including but not limited to the following:

  • Bridging finance – a short-term secured loan, issued against qualifying assets and repayable within 1 to 18 months. Bridging finance can be secured against any type of property irrespective of its condition, and can be used for any legal purpose.
  • Auction finance – a specialist type of bridging loan issued specifically for purchasing properties at auction, including uninhabitable and derelict homes in need of major repairs.
  • Development finance – a short-term facility for more extensive and advanced property development and construction projects, which is typically available exclusively to experienced developers with an established track record.
  • Secured commercial loans – bespoke longer-term facilities issued for property purchases and investments, arranged by an independent broker and tailored to meet the exact needs of the investor.

In all instances, independent broker support holds the key to getting the best possible deal from an established and reputable lender. It is important to remember that many of the UK’s most flexible finance providers offer their services exclusively by way of broker introductions.

Irrespective of the type of uninhabitable property you have your eye on, broker support could pave the way for an unbeatable deal and a straightforward transaction.

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