Non-standard construction mortgages
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Understanding the nuances of mortgages can be challenging, particularly when it comes to non-standard construction properties. The purpose of this guide is to delve into the details of non-standard construction mortgages, exploring everything from the possibility of securing one, the determining factors for interest rates, the differences from standard mortgages, to the environmental considerations linked to these types of properties.
This information will be instrumental in equipping potential homeowners, real estate investors, and anyone interested in unique properties with the necessary knowledge to make informed decisions. Whether you’re considering buying a charming timber-framed house, an eco-friendly home, or a steel-framed building, we’ve got you covered. Let’s navigate the world of non-standard construction mortgages together.
A non-standard construction mortgage is a type of mortgage designed for properties that have been built using unconventional or non-traditional methods or materials. This may include but is not limited to, properties made from timber, steel, concrete, or even eco-friendly materials.
These types of mortgages may have different terms, conditions, and rates compared to a standard mortgage for a brick-and-mortar property. It’s often recommended to seek advice from a mortgage broker or adviser who specialises in non-standard construction mortgages to understand all the implications.
Yes, it is possible to get a mortgage on a non-standard construction property, but it might be more challenging than securing a mortgage for a property of standard construction.
Non-standard construction properties, due to their unconventional building methods or materials, are often seen as a higher risk by lenders. This is because such properties can pose questions about their durability, maintenance, insurance costs, and resale value.
However, there are specialist lenders who are willing to consider non-standard construction properties. They have expertise in understanding these types of properties and can assess their value and potential risks accordingly. They often provide mortgages specifically designed for non-standard constructions, commonly known as non-standard construction mortgages.
There are several lenders known to provide mortgages for non-standard construction properties. These may include but are not limited to:
Please note that each lender will have their criteria and process for evaluating non-standard construction properties, which could affect mortgage terms, interest rates, and the maximum loan-to-value ratio they’re willing to offer. They may also require a professional survey to determine the property’s condition and market value.
Finding a reliable builder for a non-standard construction project can be a critical task since it requires someone with specific skills and knowledge of non-traditional construction methods. Here are some steps to consider:
Research: Start by researching builders in your area who specialise in non-standard construction. Look for those with a proven track record of working on similar projects.
Reviews and Testimonials: Check out reviews and testimonials from past clients. Online platforms and forums can be a good source of real feedback. This can provide insight into their reliability and quality of work.
Portfolios and Case Studies: Request to see portfolios or case studies of their previous non-standard construction projects. This will give you an idea of their expertise and the quality of the end product.
References: Ask for references and contact them directly. This can provide first-hand information about the builder’s professionalism, work ethic, and punctuality.
Accreditations and Memberships: Check if they hold any relevant accreditations or are members of professional bodies related to construction. In the UK, for instance, the Federation of Master Builders (FMB) is a respected professional association in the building industry.
Insurance and Warranties: Make sure they have appropriate insurance coverage and offer warranties on their work. This can protect you from potential issues down the line.Quotes: Get multiple quotes to compare prices and understand what is included. The cheapest may not always be the best option, especially if it could mean compromising on quality or dealing with unexpected costs later on.
Contract: When you’ve chosen a builder, ensure all details are outlined in a contract. This should include project timelines, payment schedules, and what happens in the case of delays or changes.
Communication: Good communication is crucial. Make sure they understand your vision and can communicate effectively throughout the project.
Applying for a non-standard construction mortgage typically requires the same kind of documentation as a standard mortgage, although some additional information may be needed due to the unique nature of the property. The specific requirements can vary by lender, but generally, you should prepare the following:
Proof of identity: This could include your passport or driving license.
Proof of address: Documents such as utility bills or council tax bills can serve as proof of your current address.
Proof of income: This usually includes your last three months’ payslips if you’re employed or two years’ accounts or tax returns if you’re self-employed.
Bank statements: Generally, the last three months’ bank statements are required to show your income and outgoings.
Credit report: While you won’t need to provide this, lenders will likely check your credit history. You can also check it yourself to ensure there are no errors.
Proof of deposit: You will need to provide proof of your deposit and explain the source of the funds.
Property details: Information about the property you wish to buy, including the address and sale price.
In addition to these documents, non-standard construction mortgages may require:
Detailed property survey: Lenders often require a comprehensive survey by a professional surveyor who has experience with non-standard properties. This should outline the construction type, materials used, and the property’s overall condition.
Estimate of repair/maintenance costs: If the property needs significant work, lenders may want an estimate of the costs.
Insurance quotes: Non-standard properties can be more expensive or difficult to insure. Some lenders might require an indication of the insurance costs.
The amount you can borrow with a mortgage, including a non-standard construction mortgage, depends on multiple factors:
Income: Lenders will assess your income to determine how much you can afford to repay each month. Typically, lenders may allow you to borrow up to 4-4.5 times your annual income, but this can vary.
Outgoings: Lenders will also look at your monthly expenses, including any debts you’re currently repaying, to ensure you can afford the mortgage repayments.
Credit score: A good credit score may allow you to access better mortgage deals and potentially borrow more.
Deposit: The more you can put down as a deposit, the less you’ll need to borrow. A larger deposit could also help you access better mortgage deals.
Property value: For non-standard construction properties, the property’s valuation can significantly affect how much you can borrow. The lender will likely require a detailed property survey to accurately assess its value.
Mortgage term: The length of the mortgage term can also impact how much you can borrow. A longer term might mean smaller monthly repayments, but you’ll likely pay more in interest over time.
Affordability assessment: As part of new regulations, lenders must conduct an ‘affordability assessment’ to ensure you can comfortably afford the mortgage repayments now and in the future, considering potential changes to interest rates and your personal circumstances.
Please note that for non-standard construction mortgages, some lenders might have stricter lending criteria due to the perceived increased risk associated with these properties.
In the UK, several types of non-standard construction properties exist. These are typically defined as properties that are not built with traditional brick or stone walls with a roof made of slate or tile. Here are a few examples:
Prefabricated homes: Often referred to as ‘prefabs’, these homes were constructed off-site and assembled on location. They became popular after World War II to address housing shortages.
Timber-framed buildings: These homes have a wooden structure, which may be clad in a variety of materials. Timber homes can be particularly common in certain regions.
Steel-framed buildings: These properties are built with a steel frame. Some of these homes may have issues with corrosion, which can make them difficult to mortgage and insure.
Concrete houses: Including those built with precast reinforced concrete (PRC), these homes are constructed with concrete walls. Depending on the method of construction and the type of concrete used, these houses may or may not be considered non-standard.
Thatched roofs: Properties with thatched roofs are often considered non-standard due to the additional fire risk and the cost and skill involved in maintaining and replacing the thatch.
Flat roofs: Homes with flat roofs can be considered non-standard because these roofs can have a shorter lifespan and may require more maintenance than traditional pitched roofs.
Eco homes: These are homes built with sustainability and environmental impact in mind. They might use non-traditional, eco-friendly materials and energy-efficient designs, which could categorise them as non-standard.
Listed buildings: These are buildings of historical or architectural importance. They can be considered non-standard due to restrictions on alterations and potentially higher repair and maintenance costs.
Like any financial product, non-standard construction mortgages have their advantages and disadvantages. Below are some key points to consider:
Access to unique properties: Non-standard construction mortgages allow you to purchase unique, unconventional properties that standard mortgages don’t typically cover. This can include eco-friendly homes, prefabricated houses, and homes with historical or architectural significance.
Potential for lower costs: Some non-standard homes, particularly prefab houses or those built with certain alternative materials, can be less expensive than traditional homes, potentially giving you more houses for your money.
Opportunities for customisation: Non-standard construction homes can often offer more opportunities for customisation, allowing you to create a unique, personalised living space.
Limited lenders: Fewer lenders offer non-standard construction mortgages due to the perceived higher risk associated with these types of properties. This could limit your options and potentially lead to less competitive rates.
Higher interest rates: Due to the higher perceived risk, interest rates on non-standard construction mortgages may be higher than for traditional mortgages.
Longer application process: The application process for a non-standard construction mortgage can be longer and more complex, often requiring detailed surveys and valuations of the property.
Potential for higher maintenance costs: Depending on the type of non-standard construction, maintenance costs could be higher than for traditional homes. This is particularly true for properties with historical value or unique building materials that may require specialist skills to repair or replace.
Potential resale issues: Depending on market trends and buyer preferences, non-standard construction homes can sometimes be harder to sell. They might also appreciate in value more slowly than traditional homes.
Obtaining a mortgage for a non-standard construction property can be more difficult than for a traditional brick or stone house for several reasons:
Perceived risk: Non-standard construction properties are often seen as riskier investments by lenders. This is because these properties can pose uncertainties around durability, maintenance, insurance costs, and resale value.
Limited market: There may be a smaller market for non-standard properties, which could potentially make them harder to sell. Lenders take this into consideration as they may need to sell the property if a borrower fails to keep up with their repayments.
Maintenance and repair costs: Non-standard construction properties may require more specialist maintenance or repairs, which can be more costly. This could impact the borrower’s ability to keep up with mortgage payments.
Limited data: There’s less data available on the long-term performance and durability of some non-standard construction types, making it harder for lenders to accurately assess the risk involved.
Specialist knowledge required: Evaluating non-standard construction properties often requires specialist knowledge, which not all lenders possess. Specialist surveys might be needed to assess the property’s condition and value.
Insurance issues: It may be more difficult or expensive to obtain suitable buildings insurance for non-standard construction properties, which can be a requirement for granting a mortgage.
For all these reasons, many mainstream lenders might avoid lending on non-standard construction properties, which can make finding a mortgage more challenging. However, there are specialist lenders who do offer mortgages on these types of properties, understanding the unique features and risks associated with them.
Getting a mortgage on a non-standard construction property can be more complex than obtaining a traditional mortgage due to the perceived increased risks. However, it’s not impossible. Here are the steps you can consider:
Do your research: Start by understanding what type of non-standard construction you’re dealing with. Different construction types might have different issues to consider. For instance, properties with a timber frame might face different challenges compared to a prefabricated or concrete house.
Get a specialist survey: Non-standard construction properties often require a specialist survey to evaluate the property’s condition and value. A detailed survey can identify any potential issues, which can be useful when negotiating the property price and when applying for a mortgage.
Find a specialist lender or broker: Many mainstream lenders might not offer mortgages for non-standard construction properties. Therefore, you may need to look for specialist lenders who do. A mortgage broker experienced in non-standard construction properties can be invaluable in this process. They can help you find suitable lenders and assist with the application process.
Prepare your finances: As with any mortgage, you’ll need to ensure your finances are in order. This means checking your credit score, having proof of income, and saving for a deposit. You might find that a larger deposit is required for non-standard construction properties due to the higher perceived risk.
Consider insurance: You may need to ensure that you can get suitable buildings insurance for the property. Some insurers might charge higher premiums for non-standard construction properties or have certain exclusions. This can be important because having buildings insurance is often a condition of mortgage offers.
Apply for the mortgage: Once you’ve found a suitable lender and prepared all necessary documentation, you can proceed with the mortgage application.
Please note that the process and requirements can vary depending on the lender, the type of non-standard construction, and your personal circumstances. Always consult with a mortgage adviser or broker to understand all the implications and to guide you through the process.
When obtaining a mortgage, whether for standard or non-standard construction, building insurance is typically required by lenders. This is to protect the property, which serves as collateral for the mortgage, from physical damage. Here’s what you need to consider for a non-standard construction property:
Building insurance: This is a must-have. It covers the cost of repairing or rebuilding your home if it’s damaged due to events like fire, storm, flood, subsidence, and others. For non-standard constructions, getting this insurance can be more complicated and potentially more expensive, as these types of properties might be seen as higher risk. The cover should be enough to rebuild the property in case of total loss.
Contents insurance: While not typically required by lenders, this is recommended as it covers your belongings inside the property against damage or theft.
Specialist cover: Depending on the type of non-standard construction, you might need a specialist insurance policy. For instance, homes made of non-traditional materials, timber frames, thatched roofs, or listed buildings might need specialised coverage due to the unique risks they present.
Liability insurance: If you’re constructing a new home, you might need liability insurance to cover any potential accidents that happen on site.
It’s crucial to shop around and explore your options since not all insurance providers offer coverage for non-standard construction properties. Working with an insurance broker who has experience with these types of properties can be beneficial. They can help you find suitable insurance providers and understand the specific considerations for your property type.
Buying any property is a significant decision, and when it comes to a non-standard construction property, it’s highly advisable to seek expert advice before proceeding. Here’s why:
Risk assessment: Non-standard construction properties can come with a variety of potential risks and issues. These can include structural concerns, high maintenance costs, difficulties obtaining insurance, resale challenges, and more. A professional can help you understand and assess these risks.
Survey needs: A detailed survey by a professional surveyor who understands non-standard construction is crucial. They can identify any potential structural issues, estimate the cost of any necessary repairs, and determine whether the property is a sound investment.
Mortgage challenges: Mortgages for non-standard construction properties can be harder to obtain and may come with less favourable terms compared to standard construction mortgages. A mortgage broker with experience in non-standard construction mortgages can guide you through this process and help you find a suitable lender.
Legal considerations: Depending on the type of non-standard construction, there could be additional legal considerations. For example, listed buildings or properties within conservation areas have restrictions on the changes you can make. A conveyancing solicitor can help you understand these legal aspects.
Insurance issues: As mentioned earlier, getting suitable insurance for non-standard construction properties can be challenging. An insurance broker can help you navigate this process and find a suitable policy.
Overall, while buying a non-standard construction property can be an excellent investment, it’s crucial to understand the unique challenges and risks these properties can present. By seeking expert advice, you can make an informed decision and potentially save yourself from significant issues down the line.
Securing a mortgage for a non-standard construction property can be more challenging than for a traditional property, but there are steps you can take to increase your chances:
Improve your credit score: Lenders will look at your credit score as a measure of your reliability as a borrower. Make sure you pay all your bills on time, avoid taking on new debt, and check your credit report for any errors. A higher credit score can improve your chances of approval and help you get better interest rates.
Save a larger deposit: The more money you can put down as a deposit, the less risk the lender takes on. For non-standard construction properties, lenders may require a larger deposit than usual, sometimes up to 20-25% of the property value.
Get a detailed survey: A comprehensive survey of the property by a surveyor experienced in non-standard construction properties can reassure lenders about the condition and value of the property.
Proof of income: You’ll need to prove that you have a stable income that’s sufficient to cover the mortgage payments. The more income evidence you can provide, the better.
Manage your debt: Lenders will consider your existing debts when deciding whether to approve your mortgage application. Try to pay down as much debt as possible before applying.
Use a specialist broker: Some brokers specialise in non-standard construction mortgages and have strong relationships with the lenders who offer them. They can help you understand what each lender is looking for and guide you through the application process.
Get an agreement in principle: An Agreement in Principle (AIP) from a lender indicates that they would, in principle, be willing to lend you a certain amount. This can make you a more attractive buyer.
Secure suitable insurance: Having suitable building insurance in place for a non-standard construction property can reassure lenders that their investment is protected.
Consistent employment history: Lenders prefer borrowers with a stable employment history. If you’re self-employed, you might need to provide more evidence of your income.
Non-standard construction mortgages can be complex, and there’s a lot to consider. Here are a few additional things that you might want to keep in mind:
Variety of non-standard constructions: There’s a wide range of non-standard construction types, each with its own set of considerations. These can include timber-framed houses, steel-framed buildings, prefabricated homes, eco homes, listed buildings, and many more. It’s important to know exactly what type of construction you’re dealing with.
Not always negative: Non-standard doesn’t always mean a poor choice. Some non-standard construction homes have unique features or historical value, and some are more eco-friendly than traditional homes.
Regulations and standards: Some non-standard constructions might not meet current building regulations or standards, which can affect insurability and mortgageability. You might need to invest in upgrades or repairs to meet these standards.
Local knowledge: In some areas, certain types of non-standard construction are common. Local lenders or brokers may have a better understanding of these properties and might be more willing to offer mortgages on them.
In the end, while non-standard construction mortgages can be more challenging to secure and come with their unique considerations, they can also open the door to unique and interesting properties that you might not otherwise have access to. It’s essential to do your research, get expert advice, and make sure you fully understand what you’re getting into.
When considering the purchase of a non-standard construction property and the associated mortgage, speaking with an expert is crucial for several reasons:
Understanding risks and benefits: Non-standard construction properties come with a unique set of risks and potential benefits. An expert can help you understand these complexities and guide you in making an informed decision.
Navigating the mortgage process: Mortgages for non-standard properties can be more complex and harder to secure than traditional mortgages. A mortgage expert familiar with non-standard constructions can help you navigate the application process and find lenders who specialise in these types of properties.
Evaluating the property: Non-standard constructions may require a specialist survey to evaluate the property’s condition and value. An expert can guide you on what kind of surveys are necessary and how to interpret the results.
Securing appropriate insurance: Getting suitable insurance for non-standard construction properties can be challenging. An insurance expert can help you find providers that offer coverage for your property type and understand the potential costs and exclusions.
Resale value considerations: An expert can help you understand the potential resale value of a non-standard construction property, which could be a significant consideration if you plan to sell in the future.
Compliance with regulations: Some non-standard constructions might not meet current building regulations or standards. An expert can help you understand what upgrades or repairs might be necessary for compliance.
Access to specialist lenders: Not all lenders provide mortgages for non-standard construction properties. A mortgage expert can help you identify and approach lenders who do.
In short, engaging with a non-standard construction mortgage expert can provide you with the guidance and knowledge you need to make the right decisions when it comes to purchasing and financing a non-standard construction property. This expertise could save you time, money, and potential headaches in the long run.
Living in a concrete house can be healthy, provided the building is well-designed and constructed according to modern standards. Concrete is known for its durability and its ability to create a tight building envelope. This can lead to improved energy efficiency, reducing heating and cooling costs and maintaining a consistent indoor temperature. Additionally, concrete has low volatile organic compound (VOC) emissions, which is beneficial for indoor air quality.
However, proper ventilation is crucial in concrete houses to prevent potential issues with indoor humidity and to ensure a constant supply of fresh air. Without this, there could be a risk of condensation, which can lead to mould growth. Modern concrete homes are often equipped with ventilation systems to mitigate this issue.
Moreover, concrete’s mass helps to buffer noise, making for a quieter indoor environment. But, it’s important to consider factors like the finish of the concrete — since hard surfaces can echo, which might affect acoustics within the home.
Concrete houses are renowned for their longevity and can last for many decades — often 50-100 years or more — with proper maintenance. The lifespan of a concrete house will depend on a variety of factors, including the quality of construction, the environmental conditions it faces, and how well it is maintained over the years.
Concrete is resistant to many of the factors that can cause deterioration in other building materials, such as rot, rust, and pest infestation. However, it can be vulnerable to certain issues like cracking or spalling if not properly reinforced or if subjected to extreme freeze-thaw cycles without adequate weatherproofing.
Yes, you can get a mortgage on a concrete-built house, but who built it can influence the process.
Houses constructed by reputed builders who are known for quality work and compliance with building codes are more likely to be favoured by mortgage lenders. If the builder has a strong track record and the property meets standard regulations, lenders feel more secure in the durability and resale value of the home, which can make obtaining a mortgage easier.
However, if the property is constructed by an unknown builder or one with a questionable reputation, lenders may be more cautious. They might require additional inspections or appraisals, and there may be restrictions on the loan-to-value ratio they are willing to offer.
Properties that are part of known issues, like those built with high alumina cement or certain prefabricated concrete systems that have not been repaired or upgraded, may be particularly difficult to mortgage. In these cases, specialist lenders who are familiar with the property type and willing to consider non-standard construction may be necessary.
Non-standard concrete properties are often more expensive to finance because they present a higher level of risk to lenders. There are several reasons for this:
Specialist assessments: These properties often require more thorough and specialised assessments to evaluate their condition and the quality of the construction, which can add to the cost.
Insurance costs: Non-standard properties can be more expensive to insure due to perceived increased risks, and these costs can affect the affordability of the mortgage product.
Resale concerns: There is often a smaller market for non-standard properties, which can make them harder to sell. Lenders may worry about their ability to recoup the loan amount if foreclosure is necessary.
Limited lender options: Not all lenders will offer mortgages on non-standard properties, leading to less competition and higher interest rates for the borrower.
Remedial work: If the property requires repair work to address defects common in some types of concrete construction, this can also increase the cost of the mortgage.
The higher costs reflect the additional work lenders and insurers must undertake to understand the property’s risk profile and the potentially limited liquidity of these assets in the mortgage market.
We are a hybrid mortgage broker and protection adviser. However, we want to make it clear that we do not have physical branch offices everywhere in the UK. You can get our services over the phone, online, and face-to-face in some circumstances.
Please keep in mind that while we may not be local to you, we may still assist you. Imagine if you had a long-term health issue that needed to be addressed. Would you rather have the person who is closest to you or the person who is the best? Now is the moment to put that critical thinking to work in your search.
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The FCA do not regulate some forms of Business Buy to Let Mortgages and Commercial Mortgages to Limited Companies.
The information contained within this website is subject on the UK regulatory regime and is therefore targeted at consumers based in the UK.
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