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Which banks will lend me a mortgage on my flat near a takeaway?

I would like to ask which banks or building societies are lending money for properties close to takeaway restaurants.

I am trying to buy a flat behind an Indian takeaway, and have been declined for a mortgage by both Santander and Nationwide.

I am using a mortgage broker, but he said he did not know that my request was likely to be turned down.

I am now worried about being declined for a third time. Are there any lenders that will give mortgages on properties close to takeaways, and if so, which ones are they? K.W, London

This reader has found that the Indian takeaway close to the flat she wants to buy is not helping her to curry favour with lenders – and she has struggled to get a mortgage

Helen Crane, This is Money, replies: You have found a perfect home to suit your needs, but its location is proving to be an obstacle.

Although the flat you want to buy is not directly connected to the takeaway, it is still in close proximity – and this is causing a problem when it comes to getting a mortgage.

Many lenders don’t give mortgages on properties close to takeaways or fast food restaurants as a rule.

This is because of concerns that the property would be difficult to sell, in the event that you didn’t keep up with repayments and they needed to repossess it.

In their view, factors such as noise, smells, anti-social behaviour and fire risk could all make the home less attractive to future buyers.

This is something that your broker should have been aware of.

The good news is that there are lenders who will take a more lenient view when it comes to giving mortgages on these kinds of properties. 

Some lenders refuse to lend on properties close to takeaways, but others are more lenient

Some lenders refuse to lend on properties close to takeaways, but others are more lenient

These will consider applications on a case-by-case basis, looking other factors such as the condition of the property and what area it is in. Some will ask a valuer for their view and base their decision on that.

I spoke to four mortgage brokers to find out which banks and building societies you could approach next, and to get their advice on how to move forward with your purchase.

Angus Stewart, chief executive of online buy-to-let broker, Property Master, says: Customers buying flats or houses near busy commercial premises such as takeaway shops often struggle to obtain a mortgage.

Lenders are concerned about how easy it might be for them to sell on the property if they ever needed to repossess it.

In fact, the customer should also consider this risk, as there may well be circumstances in the future when they want to sell up and move on. 

They too may find fewer takers for the property than they would hope.

When it comes to getting a mortgage for this type of property customers may well find lenders turn them down, or say any decision whether or not to lend is subject to the view of a valuer.

Some lenders will consider property near commercial premises, but they may be more expensive.

Gerard Boon, mortgage broker at Boon Brokers, says: Unfortunately, mainstream lenders rarely have an appetite to lend on properties that are above or adjacent to commercial premises such as takeaways.

Takeaway restaurants may attract a crowd of people in the late hours of the evening, which may result in noise pollution.

Lenders worry that crowds and noise pollution could affect a home's resale value

Lenders worry that crowds and noise pollution could affect a home’s resale value

This may disturb local residents and influence the marketability of the property.

However, in spite of this, there are a number of mainstream and niche lenders that can consider lending to a property above a food outlet.

These lenders include NatWest, Barclays, HSBC, Bluestone, Aldermore, Swansea, Skipton, Vida, Buckinghamshire, Bath, Harpenden, Together and United Trust Bank.

Nick Mendes, mortgage technical manager at John Charcol, says: For lending purposes, the use class of a takeaway property is A5. 

Lenders that would consider giving a mortgage on these LTV are Skipton, Hinckley and Rugby, The Mortgage Lender, HSBC, Halifax, Swansea, NatWest, Aldermore and Accord. They will usually require a deposit of at least 15 per cent. 

Many of the lenders will stipulate this is down to comments from a valuer. 

Do not give up on the property if you truly believe this is the one you wish to purchase.

Matt Coulson, director and principal at Heron Financial, replies: It is very important whenever you apply for a mortgage to talk in detail with your adviser about the type of property, whether that be a purchase or a re-mortgage.

Nowadays, more than ever before, the property is the key to that process. We have seen lots going on with flats around EWS1 forms and cladding has been the big news over the past few years.

Obviously, anything that is linked to a commercial premises, particularly one selling hot food, is going to be one that lenders will want to do extra due diligence on. 

There will be additional risks there in terms of security, which is a bit trickier.

Finding the right lender could help this reader get mortgage approval

Finding the right lender could help this reader get mortgage approval

There are lenders out there that would consider this sort of property. 

Generally speaking, it might be a more specialist lender, but there are high street lenders that will consider it depending on the property’s location.

Sometimes you will find that lenders are willing to be a little more generous and bend their policy, if, for example, the property is in a more desirable area where it would be easy to re-sell.

The best thing to do is seek independent advice from a broker to get a view from the whole of the market generally and give them as much detail about the property as possible.

Helen Crane of This is Money replies: It seems that there is still hope for your property purchase.

While it may be trickier to get a mortgage, you now have a selection of lenders that are more likely to accept you.

You don’t say how large your deposit is, but it is worth noting that you will probably need to put down 15 per cent in order to be accepted.

You may also want to consider switching mortgage brokers, as lending rules surrounding takeaways is something yours should have been aware of.

If they were, you could have avoided the two failed approaches.

Before committing to this property, you should give some thought to the fact that it may be more difficult to sell on in the future, and that it could 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 minimise the number of lenders you approach if you can.

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