Unmortgageable? The property types catching brokers out in 2026
By Nick Parker, Sales Director – Network & Clubs, Together
Your client could be perfect on paper and still get rejected for a mortgage.
While affordability issues and credit histories still contribute to the majority of mortgage rejections in 2026, we’re seeing a rising number of applicants being turned away through no fault of their own, but rather the property they’re trying to buy.
It’s an issue that could conservatively see millions of homes fall into the ‘unmortgageable’ bracket for most high street lenders, stifling the housing market and wider economy and limiting the aspirations of homeowners and buyers throughout the UK.
Here are the top three property types catching brokers out this year, and why specialist lending could be the answer for brokers looking to turn a ‘no’ into a ‘yes’.
Non-standard construction
The UK has some of the oldest housing stock in Europe, with roughly 18 million homes over 50 years old*. Older property can bring a range of issues, including damp, rot, and general dereliction, but when it comes to getting a mortgage from traditional lenders, many of these properties fall outside criteria simply because of the way they were built.
This isn’t limited to one specific property type. Non-standard construction is often a deciding factor for mortgages on beautiful listed, thatched cottages and timber-framed Tudor homes, as well as popular Victorian and Edwardian terraced properties, and post-war concrete (PRC) or steel-framed houses built during the housing boom between 1945 and 1979.
What they all have in common though is that they were built before many of the modern building regulations were put in place, often making them more of a risk for traditional lenders.
They may be perfectly liveable and structurally sound, but their construction type limits lender appetite and often only becomes a factor at valuation. For brokers, this can mean processes are already well under way by the time a deal that looked straightforward on paper starts to come undone and options begin to narrow.
Turning to specialist lenders, with a more flexible approach to property types and underwriting, can often be the most effective way to save a deal and achieve the right outcome for the client.
Short leasehold
Short leaseholds remain one of the most common – and often overlooked – reasons a property can fall outside standard lending criteria. With around 5 million leasehold homesacross England and Wales**, it’s an issue that spans a wide range of property types and locations.
As lease terms begin to reduce, particularly once they fall below the 80-year threshold, the impact becomes more significant. From a lender’s perspective, shorter leases can affect both the long-term security of the asset and its future resale value, which in turn can limit mortgage availability.
What makes this particularly challenging for brokers is timing. Lease-related issues often only come to light once legal checks or valuations are underway, by which point a case that initially appeared straightforward can quickly become more restricted at the point completion should be in sight.
Early identification is key, and where a shorter lease is in place, exploring more flexible lending options can help keep a case moving and create an opportunity to address the lease as part of a longer-term strategy.
This may involve short-term funding, such as bridging finance, to complete the purchase and extend the lease before refinancing onto a longer-term mortgage once the property meets standard criteria.
Mixed-use or semi-commercial property
Properties located above or adjacent to commercial premises are another area where a seemingly straightforward case can quickly become more complex. Flats above shops, homes next to pubs or takeaways, and buildings within mixed-use developments are all relatively common, particularly in urban areas.
In these scenarios, it is often the surrounding environment that drives lender caution. Factors such as noise, maintenance, long-term marketability and tenant demand can all influence how risk is assessed, often only becoming a factor during valuations. This can result in down valuations or fewer lenders willing to consider the case at all, significantly narrowing a broker’s options on a deal that appeared to be progressing without issue.
As with other property types that fall outside standard criteria, taking a more flexible approach to underwriting, and working with lenders who understand these nuances, can help ensure that otherwise viable cases are not overlooked.
For example, specialist lenders will still have criteria that specifies how much of a semi-commercial space needs to be residential, but it’s usually more forgiving than standard lending criteria.
Summary
Property-specific factors are playing an increasingly important role in determining whether a deal progresses or not. In many cases, these issues don’t occur in isolation, with other elements such as cladding, flying freeholds and affordability constraints combining to create complexity that falls outside standard lending criteria.
But the good news for brokers is that many of these properties aren’t truly ‘unmortgageable’. They simply require a specialist approach and the flexibility to assess each case on its own merits, particularly in situations where a deal that looked straightforward at the outset begins to fall outside standard criteria.
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