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Author: Elliott Culley - Director & Mortgage Adviser of Switch Mortgage Finance
What is a Non-Standard Construction Mortgage?
You may need to apply for a non-standard construction mortgage if you plan on purchasing a property which is not made from brick and mortar with a traditional tile roof.
For many mortgage lenders, a ‘standard’ property construction involves brick walls, concrete foundations, and a tiled roof. Anything else will be classed as non construction, with some examples listed below:
- Concrete prefabs
- Steel frames
- Freehold flat
- Listed building
- Thatched roofs
- Timber frames
- Flats in high rises
- Others
Can I Get a Mortgage on a Non-Standard Construction Property?
Yes, it is possible to obtain a mortgage on a non-standard construction property.
Non-standard construction properties are higher risk, which can make them more difficult to finance. There are so many types of non-standard property, that it can be a bit of a minefield when finding out which lender will be happy with the property.
Not all lenders like non-standard construction,and some only like certain types of non-standard construction, so you will find there is a smaller pool of lenders to consider.
All lenders have their own criteria and you will need to make sure you approach the right lender first time around. Mortgages on non-standard construction properties are frequently handled on a case-by-case basis.
What Type of Survey Will Happen?
Lenders perceive non-standard construction as higher risk. Your mortgage application’s success rests on the condition of the property. Initially a basic valuation service will be completed. This report may highlight significant defects that could affect the value or safety of the property, including any issues with the construction method.
If this initial report indicates cause for concern or a need for further investigation then a specialist survey could be requested.
Speak to an Expert!
Contact us today for expert advice and guidance on your unique mortgage and property needs. We will work with you on a one-on-one to basis to help you find the right solution for your needs.
With our experience you can rest assured that you are in good hands when it comes to securing the financing you need for your property.
Why is it More Difficult to Get a Non-Standard Construction Mortgage?
Firstly the properties aren’t built to the standard business regulations, and the upkeep is more expensive. Lenders have to plan for all eventualities, if the buyer defaults on their mortgage repayments, the lender will want to resell the property to get their money back.
With less demand for non-standard construction properties, lenders worry that they will struggle to recoup their losses if forced to repossess the property. There is also the risk the owner does not maintain the property, which can affect the value of the property. Therefore the lenders are taking a higher risk and therefore have strict criteria to pass.
Is a Non-Standard Construction Mortgage Expensive?
Some high street lenders are happy with certain types of non-standard construction and therefore in certain cases you can get the lowest mortgage rates on the market. However certain types can be more niche and only specialist lenders will consider. In this scenario the mortgage may cost more.
You also need to consider maintenance costs outside of the mortgage. Some properties will require more maintenance than others and costs can be higher as a result.
You may also find home insurance is more expensive and you may need a specialist insurer to assist. We can help you with this at Switch.
Will it be More Difficult to Sell a Non-Standard Construction Property?
Yes in theory it could be harder to sell. Some potential buyers may have trouble sourcing a mortgage. Non-standard mortgages are a niche lending market and eligibility is particularly important. If you don’t maintain the property this could also cause an issue when it comes to resale.
A non-standard construction could be converted into a more mortgageable property
It’s possible to modify certain property types to move them within the boundaries of a ‘standard’ construction, or at least reduce the structural risk.
With certain types of steel-framed house, it is not uncommon to have the frame reinforced to make the construction safer.
How Much Deposit Will I Need?
Some lenders may restrict the loan to value if the property you are buying is non-standard. A standard deposit for a residential property will be around 10% or lower. If you are looking at a buy to let mortgage then you will need between 75%-80%
Which Lenders Offer a Non-Standard Construction Mortgage?
There are some high street lenders that will offer a non-standard construction mortgage for certain types of property. It really is specific to the property you are purchasing. There are many things one lender will consider that another will not. This is where a broker can really assist, and ensure you don’t apply with the wrong lender.
How do I Get a Mortgage on a Non-Standard Construction Property?
We would always recommend seeking the advice of a whole-of-market broker. Our knowledge and experience of the differences in lender criteria could save you time and we can ensure the best possible deal from the market.
We have access to specialist mortgage lenders only available to brokers. This can increase your chances of finding a mortgage for your property.