While the majority of houses are classified as having “standard construction,” or the traditional bricks and mortar, there are many homes in the UK that are classified as having “non-standard construction,” which can include anything from a contemporary steel-framed home to a thatched country cottage.
We’ll examine non-traditional construction mortgages in this post, including how they operate, how much you may borrow, and how a broker can help you get the best offer.
What is a non-standard construction mortgage?
As the name implies, a non-standard construction mortgage is one that is designed exclusively for homes that aren’t of standard construction, meaning they aren’t formed of stone or brick and don’t have slate or tiles covering their roofs.
A wide range of building materials and property kinds fall within the category of non-standard construction, including but not limited to:
- Steel frames
- Timber frames
- Prefab house or modular elements
- Thatched roofs
- High rise flats
- Flat roofs
- Listed buildings
If it’s not immediately clear, the property information should indicate if it’s non-standard construction. Then, your survey will be able to get more specific.
Can you get a mortgage on a non-standard construction house?
Even while obtaining a mortgage for a home that isn’t under construction might be more challenging, it’s still feasible, especially if you have the proper specialized broker in place.
The main problems with non-construction homes stem from the additional inherent risk to lenders; as a result, you should anticipate to pay a little bit higher interest rates and go through a more stringent application procedure. If you can put down a larger deposit, for example, this can lower the cost and give you more possibilities. Anything you can do to assist reduce this risk will make it simpler for you to secure a mortgage.
How a broker can help when purchasing this type of property
Brokers are usually a beneficial complement to the mortgage application process, but they are especially important for non-traditional construction financing. Anything that prevents you from getting a conventional mortgage reduces your alternatives and comes with tougher requirements and higher interest rates. A broker with experience with houses built differently can get right to the heart of the matter, guiding you toward lenders who will be understanding of your home while avoiding those who would try to frustrate you or overcharge you.
A broker may also assist you with gathering any specialized papers and navigating any particular procedures related to your home. Your lender could require an ESW1 form if you want a mortgage for a clad high rise, for instance, or if you want to buy a concrete house but are unsure how the many various building techniques would affect your mortgage.
Which lenders will consider applications?
Due to the wide range of property types that fall under the category of “non-standard construction,” there isn’t a single mortgage product that is provided by a set number of lenders. However, there are many lenders, including high street banks, that will be willing to examine your application; you simply need to focus your search to match your circumstances. Your broker can assist you with this.
For instance, Halifax and Barclays are both willing to consider non-traditional construction loans for a variety of property types, such as homes built entirely of wood, those with thatched roofs, and buildings with concrete foundations. Like Santander, who will also take into account mortgages on coach houses and churches that have been transformed.
Homes built of faulty precast reinforced concrete (PRC) are not lent to by Barclays, although Halifax could if the property has been restored using a recognized program.
Many lenders impose restrictions on the number of storeys in the building if you’re wanting to buy a high rise apartment. For instance, the Scottish Building Society has an eight-story maximum while Bank of Ireland won’t lend on structures with more than 10 stories.
Rates for unconventional construction mortgages are often a little higher than average rates for conventional mortgages, but working with a broker will ensure that you get the best prices.
It’s critical to keep in mind that these lenders may think about providing mortgages for unconventionally constructed residences, but there is no assurance that they would. All properties are always open to the valuer’s opinions, regardless of the style of construction.\
What is the eligibility criteria?
With non-standard construction mortgages, it can be challenging to apply the same standards across the board because the property type and construction might vary greatly from one house to another.
Applications are often evaluated on a case-by-case basis since eligibility varies greatly. Mortgages for flat roofs, for example, may vary depending on the exact percentage of the roof that is flat, with some lenders willing to consider completely flat roofs while others prefer to consider each situation individually.
Property type and condition – To acquire a thorough understanding of the building’s state, an accurate present appraisal, and an evaluation of any possible future problems, lenders will demand a survey. For leasehold properties, there could be minimum standards for the length of the remaining lease as well as additional obligations like ground rent and service fees. Some lenders may additionally need an ESW1 form for clad high rise apartments. Even while it’s not strictly necessary, you could discover that certain lenders won’t approve you for a mortgage without it.
Deposit requirements – You should anticipate that lenders will have lower LTV restrictions than on a regular mortgage for all types of properties in order to offset the greater risk. A non-standard construction mortgage may demand a greater deposit, often up to 25% as a minimum, when a conventional mortgage may just have a basic 10% deposit requirement. Your ability to negotiate better rates will increase as your LTV decreases.
Credit history – Regardless of the type of property, your credit history can affect your eligibility for a mortgage. However, when it comes to non-standard construction mortgages, where the lending pool is already constrained and the loan is seen as having a higher risk, any credit issues can make it more challenging to obtain a mortgage. If you’re concerned about your credit history, go to your broker. They could be able to help you obtain a specialized poor credit mortgage.
Other things to consider
Before considering if it’s worthwhile to purchase a non-standard building property, it’s vital to examine the following consequences as well. Unusual homes and construction techniques might affect finances and plans later on, not only at the mortgage application stage.
Valuation – Any mortgage choice must include a value, but it becomes even more vital when your new house is unique. Since lenders typically lack information regarding uncommon property types, they will rely on the survey and value reports to guide their choice. It’s crucial to get on board someone who is knowledgeable about your home’s construction since an undervaluation might make or break your mortgage.
Insurance – Buildings insurance is frequently a requirement of a mortgage offer, so you should account for it right away. Because your property type has a larger continuous risk than ordinary, insurance for odd dwellings is frequently more expensive than average. A specialty insurer may be able to offer you a fantastic rate since your broker will already be familiar with your house.
Maintenance – In order to maintain non-standard building properties to a high quality, a lot more effort is sometimes needed (think thatched roofs). Any lack of upkeep might result in a decline in property value, which may affect your capacity to sell or refinance in the future.
Resell potential – Consider whether the nature of your home can restrict the pool of possible purchasers and make it more challenging to sell if you believe you might want to sale it in the future. Perhaps there is anything you can do in the meantime to lower the structural risk and improve the property’s marketability, such strengthening steel frames.
Can you get a non-standard construction mortgage in Scotland?
You can, indeed. The process of obtaining a mortgage in Scotland is very similar to that in England and Wales, but it is important to keep in mind that there are generally fewer lenders in Scotland offering mortgages, and some of them have postcode restrictions, making it more difficult to obtain a mortgage in some regions of the nation than others.
Since there are fewer lenders available to pick from and non-standard construction mortgages are more specialized than normal mortgages, it can be even harder to discover the best fit if you’re buying in Scotland. Finding the best offers will be made easier if you work with a broker that is knowledgeable about the Scottish market and has special expertise with unconventional construction mortgages.