The process of securing a mortgage for a property with a history of subsidence can be daunting, especially in the UK where the issue is a common concern. The reality is that many properties in the country have some form of subsidence history, which can affect the structural integrity of the house, its insurance premiums and the potential mortgage possibilities. This detailed guide will provide practical advice on how to successfully navigate this process and secure a mortgage for a property with a history of subsidence.
Understanding Subsidence
Before proceeding with the buying process, it is crucial that you have a profound understanding of what subsidence entails. Subsidence is a ground movement that causes the soil beneath a property to shrink, resulting in a structural shift. This can lead to notable structural issues, including visible cracks on the walls, doors or windows that stick, and uneven floors.
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Subsidence is primarily caused by the kind of soil the property is built upon. For instance, houses built on shrinkable clay soils or soils filled with organic material are at a higher risk of subsidence. Other factors such as nearby trees and vegetation, leaking drains, or historic mining activity can also contribute to subsidence.
Risk Assessment of Properties with a History of Subsidence
The risk associated with buying a property with a history of subsidence is a considerable factor that impacts the decisions of both insurers and lenders. Many lenders are wary of approving mortgages for properties with a subsidence history, due to the potential high cost of repair and maintenance.
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Before taking the plunge, it is advisable to find a professional surveyor to conduct a thorough inspection of the property. The surveyor will be able to identify the signs of subsidence, assess the stability of the ground, and estimate the potential cost of repair. It’s also wise to delve into the property’s history, uncovering any previous underpinning or subsidence-related repairs.
The Role of Insurance in Buying Properties with Subsidence Issues
Insurance plays a vital role in buying properties with a history of subsidence. It’s often difficult to secure insurance for a house with such history, and when you do, the premiums can be significantly higher.
Even though it might be challenging to find an insurer willing to cover a property with previous subsidence issues, it’s not impossible. Some insurance companies specialise in high-risk properties, including those with histories of subsidence. Be ready to face higher premiums, as insurers equate the increased risk with increased cost.
Keep in mind that having comprehensive insurance coverage is often a prerequisite for most lenders to approve a mortgage. Therefore, securing insurance for your prospective real estate investment is a necessity, not an option.
Securing a Mortgage for a Property with a History of Subsidence
Securing a mortgage for a property with subsidence can be a hurdle, but it’s not a lost cause. You’ll need to approach lenders who are willing to take on the risk associated with such properties.
Lenders will consider various factors before approving your mortgage application. These include the severity of the subsidence, the property’s repair history, the insurance cover in place, and the potential costs of future repairs. They may also require a detailed structural report from a qualified surveyor before making a decision.
To increase your chances, you could consider applying for a mortgage with a higher deposit to lower the lender’s risk and be prepared for potentially higher interest rates due to the perceived risk.
The Cost of Repair and Underpinning
The cost of repairing subsidence damage can vary greatly, with minor repairs being fairly inexpensive, while more severe cases requiring underpinning can cost tens of thousands of pounds.
Underpinning is a process where the property’s foundations are strengthened or extended to provide additional support. It’s often necessary in cases of severe subsidence, but it’s also expensive and invasive.
In many cases, insurers will cover the cost of underpinning, but this isn’t always guaranteed. To prevent any unexpected shocks, it’s important to fully understand the terms of your insurance coverage and to take potential repair and underpinning costs into account when applying for your mortgage.
While the journey to secure a mortgage for a property with a history of subsidence can be complex, it is feasible. By gaining a thorough understanding of subsidence, assessing the associated risks, securing adequate insurance, choosing the right lender and considering the repair and underpinning costs, you can make an informed and confident property investment.
The Importance of a Structural Engineer in Assessing Subsidence
One of the most important figures in the process of securing a mortgage for a house with a history of subsidence is a structural engineer. This professional has the knowledge and expertise to evaluate the severity of the subsidence and provide comprehensive advice on required repairs, their feasibility, and their potential cost.
In many cases, the signs of subsidence might be minor and can be repaired without significant expense. A seasoned structural engineer will be able to differentiate between minor subsidence issues and major structural changes. They can also provide you with a report that outlines the state of the property, which can be a powerful tool when negotiating with lenders and insurers.
Remember, any property with a history of subsidence will require a detailed check from a structural engineer. This should not be seen as a hurdle, but rather an essential step in securing your property. Understanding the extent of the subsidence issue is critical to making an informed decision about purchasing and insuring the property, as well as securing a mortgage.
The Challenges and Opportunities When Selling a House with Subsidence
Selling a house that has a history of subsidence can present its own set of challenges. Potential buyers may be dissuaded by the risk of subsidence, and the associated costs for repairs and insurance. Despite this, it’s important to remember that all is not lost if you’re trying to sell a property with subsidence issues.
Honesty is key when selling a house with subsidence. Being transparent about the property’s history of ground movement and its impact on the structure can help build trust with potential buyers. In many cases, providing evidence of repaired and managed subsidence can actually be a selling point, as it shows the issues have been properly addressed.
Another factor to consider is the price. Properties with a history of subsidence will typically sell for less than those without this issue. However, this could present an opportunity for buyers who are willing to take on the risk, especially if they can secure a mortgage for the property. It’s also worth noting that the stigma of subsidence is slowly changing, with more and more buyers willing to consider properties with subsidence, providing the issue has been appropriately managed.
Conclusion
Securing a mortgage for a property with a history of subsidence can indeed be a daunting task. The path is paved with challenges, from understanding the nature of subsidence, to assessing the risk, finding the right insurance, and finally selecting a lender who is willing to finance your venture.
Nonetheless, as this guide has shown, these challenges are surmountable. With a clear understanding of subsidence, the help of a qualified structural engineer, and a willingness to take on the risks and responsibilities, it is possible to buy or sell a property with a history of subsidence.
Remember, the key to successfully navigating this process is knowledge and preparation. We hope this guide has provided you with a solid foundation to understand the complexities of securing a mortgage for a property with a history of subsidence. After all, with the right approach and comprehensive understanding, securing that dream home may be closer than you think.
