If you’re thinking of buying a property in a rural area, there are some problems that buyers in towns and cities are unlikely to face (rights of way and not being on mains drainage are two examples that spring to mind). Mortgage lenders are a pretty cautious bunch by nature — especially in the current climate — so it’s worth being aware of what might scare them before you start your search.
1. Unconventional construction
If mortgage lenders were in charge of building properties, they’d all be low rise, with brick walls and tile or slate roofs. Happily, they’re not, but they do prefer so ‘conventional’ construction. So:
Thatched roofs: Not generally a problem for mortgage lenders if it’s in reasonable condition. The mortgage lender would probably want to be sure that you could get household insurance under ‘normal’ terms.
Timber framed/cob: Mortgage lenders are generally fairly comfortable lending on timber framed properties but cob or wattle and daub may be an issue.
SAVVY TIP: Ray Boulger of mortgage brokers John Charcol says that the best approach is to tell your broker or lender about anything you think might be an issue as early as you can. “You might not always know what could cause a problem, but it could save you spending on mortgage fees — and will save time — if the mortgage lender won’t lend on that type of property.”
Not all country properties come with acres of land but some do and mortgage lenders can be rather twitchy about this. If you’re thinking of buying a property with more than a few acres (opinions vary but anything from four or more to ten or more acres can induce nervousness in a mortgage lender. The best advice is to:
Understand the legal restrictions of the land. David Hollingworth of mortgage brokers London and Country says some land may have restrictions. “Lenders don’t generally like agricultural restrictions — which basically say the land can only be used for farming.”
Keep the loan to value limits low. If the amount you’re borrowing means that the mortgage is no more than 75% of the value of the property (excluding the land), some lenders will be happy to lend on this basis, says Ray Boulger.
SAVVY TIP: Ray says that high street lenders are more likely to turn down a mortgage in this situation, but smaller building societies may take a more ‘sensible’ approach.
3. Valuations: Valuers are herd animals and tend to value properties based on what a similar property in the area has sold for. If you’re buying an unusual property and/or it’s in a rural area where not many properties have sold they may struggle and err on the side of caution.
SAVVY TIP: David Hollingworth of London and Country mortgage brokers says that if you’re thinking of buying a property, it may be worth contacting a local valuer and asking them if they know the property and if they’ve been asked to value it. If so, did they recommend it for mortgage purposes or was there a problem?
4. Condition. Some rural properties can be in a worse state of repair than those in urban areas which may affect the valuation figure. Charlotte Wright of Alpha Chartered Surveyors, based in Shropshire, says that lenders don’t generally worry if the cost of any repairs is less than 5% of the purchase price, but if it’s more the valuation could be affected.
SAVVY TIP: Some lenders may retain a proportion of the money until the repairs have been carried out, others may lend less.
5. Mains water: Some rural properties aren’t on mains water, which can cause a problem, says Charlotte Wright “Lenders don’t generally like properties that aren’t on mains water.”
SAVVY TIP: A related problem might be a well. A disused well isn’t generally a problem (as long as it’s structurally sound) but mortgage lenders can be cautious if a well supplies a private water suppply.
6. Mains drainage. Not being on mains drainage isn’t in itself an issue, but if the water drains onto someone else’s land and there’s no proper ‘drainage easement’ that could affect the value or your choice of lender.
SAVVY TIP: A drainage easement’ is a legal agreement that says waste water from your property can pass through your neighbour’s.
7. Rights of way and access. Country properties are more likely to have a problem over rights of way. It’s not unknown for a sale to be scuppered at the last minute when a solicitor discovers a public right of way through the garden. Private roads aren’t generally a problem but if you can only access your property down a rickety lane with no tarmac, lenders may be nervous.
8. Two (or more) kitchens. Some large, old properties have more than one kitchen and others may have been converted so there’s a ‘granny annexe’. Be aware that mortgage lenders don’t like properties with two kitchens, says Ray Boulger. “They take the view that it’s easy to divide up and rent out. Some lenders will play ball but others won’t even consider it.”
9. Legal title. Some properties with land, especially those that have been in the same family for years, may have been divided up but not had the correct legal ‘title’ drawn up. Charlotte Wright says that there are far more defects in title on country properties than rural ones.
10. Talk to your solicitor first. Because there can be so many issues around rights of way, drainage and title, it may be worth talking to a solicitor and getting the searches organised before you spend money on a structural survey. That way, if there’s an issue of a footpath through the living room you won’t have wasted hundreds (or more) getting a structural survey done.
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