In the UK, there are mortgages available for all kinds of properties. However, every lender has its own criteria which means they don’t all lend on all mortgage property types, especially non-standard construction properties. Fortunately, there are number of lenders that do provide non-standard construction mortgages for properties that aren’t made from standard construction materials. In this guide, we’ll discuss how a mortgage for a non-standard construction UK property works and how to get one. Remember, a mortgage building survey will be required when buying a house, which will provide essential information about its structure for lending purposes.
The Topics Covered in this Article Are Listed Below:
- What Is a Non-Standard Construction Mortgage?
- Is Getting a Mortgage on a Non-Standard Construction Difficult?
- How Do I Get a Non-Standard Construction Mortgage?
- What Do I Need to Know About Non-Standard Construction Mortgages?
- Are Non-Standard Construction Mortgages Very Different from Standard Mortgages?
- About Non-Standard Construction Mortgage Lenders
- Can You Get a Mortgage on a Non-Standard Construction Home in Scotland?
- The Bottom Line
What Is a Non-Standard Construction Mortgage?
If you want to buy a property that is constructed of anything other than bricks and mortar, you may need to apply to a lender with criteria that allows non-standard construction properties. "Normal" house construction for many mortgage lenders comprises: brick walls, concrete foundations and a tiled roof. Anything that differs from this is considered non-standard.
This implies that there are a variety of building types that might be considered non-standard, including:
- Timber frame home mortgages
- Steel frame House Mortgages
- Thatched roof mortgages
- Listed cottages and Grade 2 Listed Properties
- Concrete prefab home mortgages
- Wooden walls
- Woodwork frames
- Flintstone walls
- Corrugated iron walls or frames
- Single brick
These are only a few examples, as there are many more types of properties that could be classed as non-standard constructions by mortgage lenders. It's important to remember that not all lenders will offer mortgages on properties with non-standard construction due to the higher perceived risk. Their criteria may also permit some types of non-standard construction but reject others.
Is Getting a Mortgage on a Non-Standard Construction Difficult?
It can be more difficult to get a mortgage on a non-standard construction property than a standard one, since many lenders have stricter criteria regarding the properties they’ll lend on. Some high street lenders will lend on certain types of non-standard construction properties but not on others. In the event that you can’t get a high street lender or building society to consider the property you want to purchase, you’ll likely need a specialist lender with criteria that doesn’t distinguish between properties. Specialist lenders require borrowers to use an intermediary like John Charcol. They don’t deal directly with borrowers.
Another challenge with getting a mortgage for a non-standard construction property is that all lenders require that you have buildings insurance on a property before agreeing to lend. And securing insurance on a non-standard property comes with its own challenges.
Finally, most specialist lenders will often require ahigher mortgage deposit and may charge a higher interest rate. This can obviously make securing a mortgage more difficult as you’ll need to meet additional criteria.
If you manage to secure a mortgage on a non-standard construction property from a high street lender or building society, the deals won’t be as expensive as those from a specialist lender. The criteria may vary from the criteria for products available on standard properties, and they may require a larger deposit.
How Do I Get a Non-Standard Construction Mortgage?
To get a mortgage on a non-standard construction property, you’ll most likely need to use a mortgage broker like John Charcol. This is because, depending on the type of property you want to purchase, you may require a specialist mortgage lender that only operates through intermediaries. Specialist lenders don’t typically provide advice to the borrower, they rely on the broker to advise the client.
The good news is that John Charcol is an independent, specialist mortgage broker with over 45 years of experience in arranging both standard and non-standard construction mortgages.
As an independent mortgage broker, we have relationships with many different specialist lenders and access to underwriters from an early stage; this allows to speak to a lender about your mortgage application in more detail prior to submission, enabling us to source you the best deal for your non-standard construction property.
If you're interested in finding out more about getting a mortgage on a non-standard construction property, contact us on 0330 433 2927.
What Do I Need to Know About Non-Standard Construction Mortgages?
If you're looking for a non-standard construction mortgage, it's worth considering the points below. There are often added costs or requirements associated with non-standard buildings.
Insurance
As with any home, you need buildings insurance in order to secure a mortgage. But, because of the unique nature of non-standard construction, you’ll most likely need specialist insurance cover which is more expensive than standard buildings insurance.
It's important to remember that not all buildings insurance policies cover damage caused by things like floods or storms - so make sure you're adequately protected when sourcing the right insurance cover.
Our team can advise you on your insurance options and guide you in the right direction if you choose.
Maintenance
Maintenance is crucial and it can be a deal-breaker. Many forms of non-standard construction require greater maintenance or specialised treatment, which can be more expensive. For instance, every 40 years or so, a thatched roof must be entirely replaced.
In many instances, maintenance is given greater attention in non-standard homes, as incorrect care may cause damage over time and significantly reduce the property's value — another incentive to get a survey before applying for a non-standard construction loan.
Surveys
Mortgage lenders will require a valuation to be carried out on the property before they’re willing to finalise a mortgage agreement. They’ll arrange this with the estate agent or seller. The valuation will assess any potential risks and confirm the market value of the property.
If the valuer flags any potential issues or risks with the property, then the lender may require that you arrange a more detailed survey such as a structural survey. The likelihood that you’ll need a more detailed survey than a typical valuation is increased with a non-standard construction property. Furthermore, it’s more likely there will be more issues that need to be rectified with a non-standard construction property - e.g. electricity, damp, etc. – which will obviously give you more costs to consider or impact specifics of your deal with the lender.
Repair or Development Options
You might be able to turn a non-standard construction property into a more mortgageable one by making clever repairs or developments. For example, if you want to purchase a timber framed cottage but the timber frame has been weathered – through rot, insects, etc. – you may want to get the frame reinforced - e.g. with steel or concrete.
To do this, the lender would either agree to a purchase with a retention until the work has been completed, or they’ll lend on a lower value. This situation will only really be suitable for you if you have the money to carry out the work on the property.
If the lender won’t agree to these conditions and/or you don’t have the money to fund the work on the property yourself, you may be able to secure bridging finance to purchase the property and pay for the necessary work. Once this work is completed, you can then remortgage with a lender.
Selling the Property On
If you buy a non-standard property, it may be harder to sell it later as non-standard properties typically belong to a niche market. Also, the fact that you were able to obtain a mortgage on a non-standard property does not guarantee that an interested buyer will be able to do the same in the future. Because eligibility is increasingly important and lenders' attitudes to risk change over time — a property that was once possible to mortgage may become more difficult to finance in the future.
It's crucial to be aware of changes to your lender's criteria, as well as any industry-wide changes that might affect the mortgageability of your home in the future. Speaking to your mortgage adviser is the easiest way to stay up to date on this.
Are Non-Standard Construction Mortgages Very Different from Standard Mortgages?
All in all, non-standard mortgages aren't that different from regular ones.
Some key differences to bear in mind are:
- A lower maximum loan-to-value ratio: this is the percentage of the property's value that the lender is willing to finance. Some lenders will limit the LTV on non-standard construction properties to 80% - 85% due to their criteria
- A higher interest rate: if you can’t source with a high street lender then you may require a specialist lender – and specialist lenders typically have higher rates
- Longer processing times: the underwriting part of the mortgage process will be more in-depth for a non-standard construction property than a standard one.
- Limited pool of lenders: it’s more likely that a non-standard construction property will require a specialist lender with lenient criteria. This limits the lenders available to you
- May require an intermediary: if you require a specialist lender, then you’ll need to use a mortgage broker like John Charcol as most specialist lenders won’t deal with applicants directly
If you're thinking of buying a property that falls into the non-standard category, it's important to be aware of the challenges involved. Nonetheless, remember that a mortgage broker will make it much more likely you’ll be able to secure a mortgage for a non-standard construction property – we’ll also make the process a lot easier for you.
About Non-Standard Construction Mortgage Lenders
Non-standard construction mortgage lenders are basically lenders that will lend on non-standard construction properties. Some high street lenders and building societies will lend on some non-standard construction properties, depending on their criteria. Sometimes, depending on the property you want to purchase, you’ll require a specialist lender that has more lenient criteria and a more thorough underwriting process.
Here are some of the high street lenders, building societies and specialist lenders who will consider lending on a non-standard construction property:
- Halifax
- HSBC
- Nationwide Building Society
- Newbury Building Society
- Skipton Building Society
- Darlington Building Society
- Market Harborough Building Society
- United Trust Bank
Below we’ve added some examples of criteria from high street lenders. This is just a snapshot of 2 well-known UK lenders and their policies on non-standard construction mortgages. As you can see, there are a great many variables to consider when it comes to this type of mortgage, so it can be a bit of a minefield for the inexperienced.
Non-Standard Construction Mortgage Halifax
The property must also satisfy certain minimal standards: it must be liveable, quickly sellable, structurally sound and able to obtain building insurance immediately. If the property is not yet in such a condition, the mortgage advance may be wholly or partially withheld, pending completion of necessary repairs to enable lending.
Mortgage on Non-Standard Construction House HSBC
HSBC's availability of mortgage products on non-standard construction varies, depending on the type of construction. Some types of constructions won't be considered by this bank, while others may be considered, with certain conditions.
Here are some types of non-standard constructions that may be considered by HSBC:
- All-timber houses
- Steel frames
- Ex-local authority
- Mundic block classed A or A/B
- Wimpey No-Fines and Laing Easiform
- Some "kit-built" builds
- Durisol houses
Can You Get a Mortgage on a Non-Standard Construction Home in Scotland?
The simple answer is yes, it is possible to get a mortgage on a non-standard construction home in Scotland. However, it can be more challenging than in England and Wales, simply because fewer lenders offer mortgages in Scotland. Non-standard construction lenders that do business north of the border generally have postcode limitations in place, making it harder to get a mortgage on a non-standard construction property away from the mainland. This is because of the smaller housing market, which is reflected by the smaller choice of lenders and products.
It's important to use a broker who knows the Scottish mortgage market well. They will be able to guide you to the right lender and help you navigate the process. The good news is that John Charcol has an experienced team of advisers that regularly help people buy all sorts of property types in Scotland.
So, if you're thinking of buying a non-standard construction property in Scotland, get in touch with us today to see how we can help.
The Bottom Line
While it may be more challenging to get a mortgage on a non-standard construction property, it’s still possible with the help of a specialist broker. As lenders all have different criteria and policies, it's important to access independent brokers who have access to the whole market. Using a broker can greatly affect the success of your application, as well as the terms, rate and fees you pay. If you're thinking of buying a non-standard construction property, get in touch with us today on 0330 433 2927 to see how we can help.
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