Why Can a Mortgage Be Declined After Valuation?
When the surveyor’s assessment demonstrates that the price agreed by the buyer and the seller is inflated, it is known as a down valuation. This can significantly impact the amount of money you can borrow or the interest rates available to you, and can be a massive hinderance in the house buying process. For example, if you are applying for a 90% loan and the estimated value of the property falls, the lender is likely to only offer you 90% of the new value. As a result, you may no longer be able to afford it. More than that, if the difference in value is considerable, you may no longer fulfil the LTV lending criteria, resulting in the lender pulling the plug entirely.
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Issues With Property
Some issues to do with the property’s condition or structural integrity can trigger immediate rejections from mortgage lenders, including:
- Certain cladding.
- Japanese Knotweed.
- Structural or roof problems.
Not only is this due to the fact that these issues can impact the property’s value, but the lender will also be aware that significant renovation and repair work can put an additional toll on your monthly finances. This puts your affordability under scrutiny once more, and may lead a lender to view the situation as high risk.
Mortgage Declined on Affordability? Here’s What to Do >
Some mortgage lenders are wary of providing loans on properties that have unusual features or are built using atypical construction methods. Your prospective property may be deemed ‘non-standard’ if it is:
- Steel or timber frame.
- Single brick.
- A high-rise flat.
If the property in question is found to fall into one of these categories, many lenders are likely to immediately reject your application. That’s why it’s important to work with an expert mortgage broker who can direct you to someone who specialises in loans for non-standard properties.
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If you are buying a leasehold property, lenders will want to make sure there is a long enough term left. This is because the length of a lease will significantly impact its value. As a general rule, mortgage lenders are unlikely to approve mortgage applications for properties with fewer than 80 years remaining.