Which banks will lend me a mortgage on my apartment near a take-out?
I would like to ask which banks or building societies lend money for properties near take out restaurants.
I’m trying to buy an apartment behind an Indian takeout and have been turned down for a mortgage by Santander and Nationwide.
I use a mortgage broker, but he told me he didn’t know my application was likely to be denied.
I now fear that I will be refused for the third time. Are there any lenders that will grant mortgages on properties close to takeout, and if so, which are they? KW, London
This reader has found that Indian take-out near the apartment she wants to buy doesn’t help her win favor with lenders – and she struggled to secure a mortgage.
Helen Crane, This is Money, responds: You’ve found a perfect home for your needs, but its location turns out to be a hindrance.
Although the apartment you want to buy is not directly connected to the take out, it is always nearby – and that poses a problem when it comes to getting a mortgage.
Typically, many lenders do not grant mortgages on properties located near take out or fast food restaurants.
This is due to the fear that the property will be difficult to sell, in case you fail to meet the refunds and they need to repossess it.
Factors like noise, odors, anti-social behavior, and fire hazards, they say, could all make the home less attractive to future buyers.
This is something your broker should have been aware of.
The good news is that there are lenders who will take a more lenient stance when it comes to granting mortgages on these types of properties.
Some lenders refuse to lend on properties close to take-out, but others are more lenient
These will review requests on a case-by-case basis, looking at other factors such as the condition of the property and the area in which it is located. Some will ask an assessor for their opinion and base their decision on that.
I spoke to four mortgage brokers to find out which banks and building societies you could contact next, and to get their advice on how to move your purchase forward.
Angus Stewart, Managing Director of the online buy-sell broker, Property Master, says: Customers who buy apartments or houses near high-traffic commercial premises such as take-out stores often find it difficult to secure a mortgage.
Lenders are concerned about how easy it might be for them to sell the property if they were to repossess it.
In fact, the customer should take this risk into account as well, as there may well be circumstances in the future where they will want to sell and move on.
They too may find fewer buyers for the property than they would have hoped for.
When it comes to securing a mortgage for this type of property, clients may well see lenders turn them down or say that any decision to lend or not is subject to the advice of an appraiser.
Some lenders will consider a property close to business premises, but they can be more expensive.
Gerard Boon, Mortgage Broker at Boon Brokers, says: Unfortunately, traditional lenders rarely feel like lending on properties above or adjacent to business premises such as take out.
Take out restaurants can draw crowds of people in the late evening which can lead to noise nuisance.
Lenders fear crowds and noise pollution will affect a home’s resale value
This can upset local residents and influence the market value of the property.
However, despite this, there are a number of traditional and specialty lenders who may consider lending to property above a grocery store.
These lenders include NatWest, Barclays, HSBC, Bluestone, Aldermore, Swansea, Skipton, Vida, Buckinghamshire, Bath, Harpenden, Together and United Trust Bank.
Nick Mendes, Mortgage Technical Director at John Charcol, says: For lending purposes, the take-out class of use is A5.
Lenders who would consider granting a mortgage on these LTVs are Skipton, Hinckley and Rugby, The Mortgage Lender, HSBC, Halifax, Swansea, NatWest, Aldermore and Accord. They will usually require a down payment of at least 15 percent.
Many lenders will state that this is due to feedback from an appraiser.
Do not give up the property if you really believe it is the one you want to buy.
Matt Coulson, Director and Principal of Heron Financial, responds: It is very important, every time you apply for a mortgage, to discuss in detail with your advisor the type of property, whether it is a purchase or a new mortgage.
Now more than ever, ownership is key to this process. We have seen a lot of things happening with flats around the EWS1 shapes and cladding has been the big news for the last few years.
Obviously, anything related to a business premise, especially one that sells hot food, will be the one that lenders want to do extra due diligence on.
There will be additional security risks there, which is a bit trickier.
Finding the Right Lender Could Help This Reader Get Mortgage Approval
There are lenders who would consider this kind of property.
Generally speaking, this may be a more niche lender, but there are larger lenders who will consider this depending on the location of the property.
Sometimes you will find that lenders are willing to be a little more generous and change their policy, if, for example, the property is in a more desirable area where it would be easy to resell.
The best thing to do is to seek the advice of an independent broker to get a general overview of the market and give them as much detail as possible about the property.
Helen Crane of This is Money responds: It seems that there is still hope for your real estate purchase.
Although it can be more difficult to get a mortgage, you now have a selection of lenders who are more likely to accept you.
You don’t say your deposit amount, but it should be noted that you will likely need to deposit 15% to be accepted.
You may also want to consider changing your mortgage broker, as the lending rules around take out is something you should have known.
If they were, you could have avoided the two failed approaches.
Before committing to this property, you should think about the fact that it may be more difficult to resell in the future, and that it may even lose value more quickly than other homes.
You should also be aware that too many credit checks could start to affect your credit score, so try to minimize the number of lenders you approach if you can.
Some links in this article may be affiliate links. If you click on it, we may earn a small commission. This helps us fund This Is Money and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.