Home buyers browsing Rightmove will now be able to check if a property is likely to get a mortgage from the bank, before they even go on the first viewing.
Along with Nationwide, the property portal has launched a digital ‘property lending check’, which aims to give home-hunters confidence that they aren’t buying an un-mortgageable home.
Rather than checking the borrowers’ credentials, it will look look for any issues with the property that could prevent lenders from wanting to offer finance.
Mortgage lenders have specific criteria outlining the types of property they won’t hand out mortgages on, which many buyers aren’t aware of.
These often include a minimum size, often no smaller than 30 sq m or 323 sq ft, which can prove problematic for people buying studio apartments.
Equally they might exclude new-build homes or flats that are located on upper floors in high-rise apartments, as they think these may lose value or be hard to sell on.
Rejected: Just as a mortgage lender can decide not to lend to a certain individual, it might also decide not to lend on a particular property
The reason lenders check this is because, if the borrower stopped paying the mortgage and the home was handed back to the bank, they would want to be able to sell it easily and recover their money.
There could also be issues if it deems the length of the lease on a leasehold property too short, or the service charge or ground rent too high.
Some lenders will not consider ex-local authority homes unless the valuer believes there is enough demand for owner occupation in the local area and that it would be easy to sell on.
Other types of property that can cause an issue include flats over commercial spaces such as shops or restaurants.
Homes can also be rejected by lenders if they are deemed difficult to insure because of risk of flooding, or those with structural problems.
A home that is deemed to be uninhabitable – for example, with no kitchen or bathroom, can be rejected by lenders, and there can be red flags raised on homes with a non-standard construction or those with Japanese knotweed in the garden.
Matt Smith, head of mortgages at Rightmove, said: ‘This is the next step in our mission to digitise more of the property market – the ability to give home-movers a real-time view of whether they are likely to be able to get a mortgage on a specific property,’ said
‘Our ambition is to build digital solutions that make the home-buying process more efficient, giving buyers a better understanding of their affordability much earlier.
Mark Harris, chief executive of mortgage broker SPF Private Clients
‘This is a first rollout phase, and we’ll be making lots of enhancements to the property lending check over the coming months.’
Mortgage brokers are slightly divided on how useful the new tool is likely to be.
Mark Harris, chief executive of mortgage broker SPF Private Clients says: ‘Anything that helps speed up the home-buying process, which can be torturously slow, is a good thing but with well over 95 per cent of properties suitable for mortgage purposes in any event, this is not a great problem solver.’
However, Nicholas Mendes, mortgage technical manager at broker John Charcol thinks the new property lending check is a smart move.
‘One of the biggest frustrations for buyers is discovering, often after they’ve found their dream property and submitted an application, that it isn’t eligible for a mortgage with that particular lender,’ says Mendes.
‘Some issues, like a short lease or a known flood risk, are slightly easier to identify early on.
‘But being able to get a clearer sense of a property’s mortgage eligibility before even booking a viewing could save people a lot of time and stress.’
How will it work?
Previously, by applying for a mortgage in principle, a buyer could find out how much they would likely be able to borrow from a particular lender, but not whether the specific home they wanted to view was likely to be eligible for a mortgage.
Nationwide will now check typical property risks on each Rightmove listing, such as flooding, or short lease lengths, to see if they would be likely to lend on the property.
The new feature is an addition to Rightmove’s mortgage in principle tool, which it says has seen a record number of people using it this year to understand how much they can borrow before going on viewings and making offers.
Rightmove says it can help estate agents identify more ‘proceedable’ buyers, cut down on wasted time, and can reduce the risk of homes falling through later in the process.
Henry Jordan, director of home at Nationwide, said: ‘We know that the home buying process needs simplifying and streamlining and technology plays a crucial role in that.
‘By working closely with Rightmove, we’ve already been able to introduce the successful mortgage in principle tool.
‘However, we know that people who find a property listing they like are keen to know whether they’ll be able to get a mortgage on it. So, the launch of the property lending check feature is the natural next step.’
Common mortgage red flags
Nicholas Mendes, mortgage technical manager at John Charcoal replies:
Some homes are much harder to get a mortgage on, often because of issues that lenders consider too risky.
For instance, flats with short leases, typically under 70 to 80 years, are frequently difficult to finance. This is because the lease will need extending soon, which can be both costly and time-consuming.
Properties built from non-standard construction materials, such as concrete or steel frames, can also raise concerns. These homes are often viewed as less structurally reliable and harder to insure, which makes lenders hesitant.
Nicholas Mendes, mortgage technical manager at broker John Charcol
Homes located in areas with a high risk of flooding can be problematic, particularly when affordable insurance is difficult to obtain. In many cases, a lender won’t offer a mortgage if there is a continued risk of flooding.
Flats above commercial premises such as shops, takeaways or pubs can also present challenges. Lenders are often concerned about noise, odours, and potential difficulties with resale.
Structural issues raised in a survey, including signs of subsidence, serious damp or roof problems, can result in a mortgage application being declined or the loan amount significantly reduced.
Some lenders are also cautious with new-build properties, especially when they believe the asking price has been inflated above market value. In these situations, buyers may find the mortgage offer is lower than expected.
