Mortgage Criteria - Graveyard Attached

[rwalkerarn]

Hi,

My partner and I are looking at converting a disused Church into a family home, however our specialist self build/conversion mortgage broker tells us most banks will refuse to lend money on a property with a graveyard attached. Can anyone tell me why the banks might have this criteria?

Sub Question - Would splitting the title on the deed get around this problem?

[bednobs]

is it because of risk of subsidence from all the holes in the ground?

[AKMild]

A lender will want to know that if you don't service the loan, he will be able to recoup his money by selling the property. A church building is somewhat specialist and there might well be a limited market for it if the lender had to sell. More so with a graveyard attached. Splitting the title might make a difference, but even so, there will be a limited market for a former church, or any building, if it's next to a graveyard.

I don't think that you'll find a 'normal' lender, and any specialist lender will want to make sure that most of the risk is on you, so that if they have to sell the property at a knock-down price to get rid of it, there'll be enough to cover their loan, with you picking up the risk of any shortfall.

Sorry if this discourages you, but good luck with the project.

[buildersmate]

Contrary to what others have said, I suspect it is because of the restrictive convenants that come with the graveyard (maintenance, access by relatives of the deceased). Bednobs is presumably 'aving a larf.
If you can split the land title into the building and the graveyard, that might do it.
I don't see that a disused church is any different as a self-build to any other secondhand building that is converted - the lender will look at the project from the point-of-view that the loan advanced must always be far less than the distressed-sale market value of th underlying plot of land. A carte blanche refusal on the building type must be linked to the risk through covenants, not the valuation.