Climate change and mortgages

Journalist: Anna Sagar, Mortgage Solutions / Specialist Lending Solutions

ended 25. June 2022

Interested in speaking to mortgage brokers about whether they have found it harder to secure mortgages on properties that are at risk of flooding, coastal erosion or other climate change-related risks.

  1. Have lenders/insurers asked for more information on these kinds of properties? 
  2. Has the criteria been stricter/differential pricing put in place? 
  3. What other options are available for you to pursue?



4 responses from the Newspage community

Any property at risk of collapse or in a known flood plain is always tricky. There's no cut and dried answer. In these circumstances, it's always 'surveyors comments', which is shorthand for if the surveyor thinks the property is ok, then they'll lend; if the surveyor thinks it's a bit dicey, they won't. An often overlooked aspect of this is not mortgage lending; it's trying to get appropriate levels of insurance cover for the property. That's where we find the fly in the ointment.
I have had a couple where it has been more challenging to secure home insurance due to the flood risk. The lenders valuers have not made any other remarks about it. As long as the clients can get the insurance, then they have been fine.
To date I’ve not had a lender turn down a property based on it’s flood risk, the stance has always been that as long as you can insure it, they’ll lend on it. The insurance has been the difficult part with many companies now removing flood as an insured peril in high-risk areas, or putting in a massive £10000 excess (similar to how they deal with subsidence), both scenario’s can mean lenders aren’t happy. I have had a property turned down for a loan due to coastal erosion once, the surveyor reported that they expected the property to fall into the sea within 10-years, which is not much use as security on a 20-year mortgage.
It is certainly more difficult to secure a mortgage within a flood zone, with more and more green areas been taken up by new build properties and also being built on flood plains there is a strong possibility that this will become more common in the future