securing a mortgage on a high risk property

Could climate change influence your mortgage application?

Climate change could impact your mortgage application, as lenders increasingly consider the risks associated with climate change when assessing loan approvals for properties. Factors such as flooding, coastal erosion, landslides, and subsidence or sinkholes are now key considerations for lenders.

The UK's Environment Agency reports a rise in flooding frequency, putting approximately one in six properties in England at risk. Coastal erosion and landslides, intensified by extreme weather and rising sea levels, can lead to significant property value losses.

Subsidence and sinkholes, resulting from ground collapse or sinking beneath a property, are also worrisome. Climate change-induced weather pattern shifts, such as wetter winters and drier summers, can destabilize soil and cause structural problems.

While lenders typically conduct property valuations to ensure the property's value supports the mortgage amount requested, they also perform additional checks to assess climate change-related risks to the property. These assessments could influence the lender's decision to approve a loan, regardless of the property's valuation.

Obtaining a mortgage for a property deemed "high-risk" due to climate change, especially if it's uninsurable due to flooding or unstable land, may pose challenges. Before applying for a mortgage, it's essential to consider potential climate change risks to the property.

If there's a suspicion of risk, hiring a surveyor for an in-depth survey, in addition to the lender's valuation, can provide more comprehensive insights. Additionally, most lenders require suitable building insurance for the mortgage term. If they perceive the property to be at risk from climate change effects, they may request confirmation of adequate coverage.