Non-Standard Construction Mortgages: When Are They Needed and Who Offers Them?
A non-standard construction mortgage might be needed if the home you’re buying or already own is built differently from the norm. Prefabricated concrete houses, steel or timber-framed homes, listed properties and flats might all require you to find a non-standard mortgage lender.
If you’re thinking about buying a house that is a little outside the norm in how it has been built, a non-standard construction mortgage could be what you need. This is because some lenders can be hesitant to approve standard residential mortgages for properties with more unusual characteristics, which they would consider an additional risk.
You could also face a similar challenge if you want to remortgage a home that hasn’t been constructed from more traditional building techniques and materials. However, if you know where to look, there are a number of mainstream and specialist non-standard construction mortgage lenders which should be able to help.
What does non-standard construction mean?
In the eyes of most lenders, a non-standard construction has been built using anything other than brick or stone for the walls and slate or tile for the roof. Some may also consider the absence of concrete foundations or a pitched roof to be non-standard.
As a result, you may need to look for a non-traditional construction mortgage if a home has been built or designed using any non-standard materials or methods.
However, there is a chance that a property one lender defines as being of non-standard construction may be viewed differently by another lender. If the home appears not to be too far from conventional, it is worth checking with other lenders whether you may be eligible for a normal residential mortgage, or if a non-standard construction mortgage is definitely what you need.
» COMPARE: Mortgage rates
Types of non-standard construction houses
The following are all types of property, or aspects of a home, which might require a non-standard construction mortgage to be arranged:
Concrete prefab houses
Prefabricated concrete homes – sometimes referred to as pre-cast reinforced concrete or PRC houses – provided a quick and relatively low-cost way to address the post-Second World War housing shortage. Although many still stand today, when problems with integral steel columns were uncovered in the 1980s, lenders began rejecting concrete house mortgages on the basis that they proved too much of a risk.
Difficulties in getting a mortgage on concrete ex-council houses built this way, including on Reema, Dorran and Orlit construction variations on this type of build, can persist today. However, arranging a non-standard mortgage might still be possible if suitable repairs have been carried out.
While it is usually possible to get a mortgage on a flat, there are certain circumstances in which it might prove harder to secure.
This can include if you want to buy a self-contained studio flat where all of your basic amenities are in a single room. Mortgages on flats above shops and in high-rise blocks with more than four storeys can also be hard to secure, even if the flat itself is on one of the lower floors.
Much of the concern here follows the Grenfell Tower tragedy in 2017 and the perceived safety of blocks of flats that have been built in a certain way.
Buying a listed property brings with it legal obligations to ensure the building is appropriately maintained so that the very reasons it is listed will endure. Because of this extra responsibility, the expense it could entail, and the potential for restrictions on how the property can be adapted for use, it can often prove difficult to secure a mainstream mortgage on a listed building.
A non-standard mortgage will almost always need to be explored for a property that features an element of single brick construction often used in Victorian times for exterior walls. The structural strength, susceptibility to rising damp, and lack of insulation provided by single brick walls are the main concerns for most mainstream lenders.
Even if a property has only a small single brick area, these issues will usually need to be addressed and approved by a surveyor to stand a chance of securing a mortgage.
There are various types of steel-framed home in the UK, some of which are viewed less favourably by lenders than others. Most of the concerns surround structural integrity and a lack of insulation, with British Iron and Steel Foundation (BISF) construction homes proving particularly problematic.
Unfortunately, BISF is also one of the most common forms of steel-frame construction. Paying out for brick reinforcement and insulation may improve your chances of securing a mortgage on a steel-framed house.
Timber-framed properties come in various forms and from different eras although, perhaps surprisingly, it doesn’t always follow that it is harder to get a mortgage for older properties.
The greater fire hazard a timber-frame might pose, the more damage a flood is likely to cause, and the nature of the home’s foundation are all usually major considerations in any application for a mortgage on a timber-frame house. The property’s exterior and how it is clad – brick or stone is usually considered more favourably than timber, plastic or metal – will be of significant interest to lenders too.
An in-depth survey and a professional structural investigation of a timber-frame property is usually necessary to get a mortgage.
Thatched roof homes
A non-standard mortgage could be required for a thatched property, but maybe not for the reason you think. Although the risk of fire is something that lenders take into account, a thatched roof property is actually no more likely to catch light than any other home.
Instead, most lenders are more concerned with how recently a thatched roof was re-ridged, and the impact of this expensive work – which is generally needed every 10 to 15 years – on mortgage affordability.
Other non-standard constructions
There are many other types of non-standard construction, which might cause a lender to think twice before offering you a mortgage. These include clay lump properties, which are constructed using materials with a high clay content, cob construction homes, where clay is mixed with flint and sand, and K-Lath homes, which incorporate welded mesh.
Getting a mortgage for a system-built house or a flat-pack home, built of prefabricated components off-site, may not be straightforward either, but shouldn’t be impossible. Indeed, going forward the hope is that securing finance on any home built using modern methods of construction, including homes built off-site and modular homes, will be made easier by the introduction of a minimum standard for modern homes.
Properties on which you’re unlikely to get any mortgage
Certain properties are not mortgageable at all, even with a non-standard mortgage. Static caravans, park homes and wood lodges all tend to fall into this category, but could potentially be financed using a personal loan or secured loan instead.
» COMPARE: Personal loans
Self-build and eco mortgages
If you’re considering building your own home, whether it will be conventional in its construction or not, you’re likely to need a self-build mortgage to get your plans off paper and on the ground.
Environmentally-friendly green homes are also growing in popularity, leading people to search for an eco mortgage to finance their build. Some mainstream lenders offer green mortgages for properties that meet certain energy efficiency criteria. But if you want to build an eco home from scratch, you may need to look towards a non-standard mortgage lender.
» MORE: Getting a self-build mortgage
Should you get a non-standard construction mortgage?
If a non-standard mortgage is what you need, there are certain points to consider ahead of submitting any mortgage application. These include:
The very nature of many non-standard construction homes might mean you’ll have to spend more time and money on maintenance than usual.
The need to re-ridge a thatched roof every 15 years or so is one example, while you’re legally obliged to maintain listed buildings to a certain standard. You should always ask the current owners about the maintenance they have carried out in the past and arrange a detailed survey, which should flag up any problems that could crop up soon.
Of course, you might not mind a few rough edges to your home, but let your property slip into the slightest state of disrepair and its value could quickly fall.
You should always weigh up how easy you think it might be to sell a property if and when you should want to. The quirkiness may be exactly why you love the building, but is this peculiarity likely to appeal to other people or put them off?
Equally, if you’re struggling to secure a mortgage because of structural deficiencies, there are no guarantees you’ll find a future buyer willing to take such a challenge on. By then, it might also be even more difficult for prospective buyers to get a mortgage for the type of property you want to sell.
Insuring the property
As insurers tend to see the same risks in non-standard homes as lenders, there is a good chance you’ll end up paying more for home insurance than on a conventional home. If the premiums are too expensive, or it’s proving difficult to find home insurance at all, a specialist insurance broker might be best placed to help.
» COMPARE: Home insurance
Survey and valuation
Don’t be tempted to scrimp with the survey you arrange on a non-traditional construction property and take heed of what it says too. As well as telling you all about the condition the home is currently in, a survey will highlight the areas likely to require your attention in the not-too-distant future.
Any potential lender will also conduct a thorough valuation of the property, which will help determine if, and then how much, it is willing to lend.
» MORE: House surveys explained
How does a non-standard mortgage differ from other mortgages?
In the main, a mortgage on a non-standard construction house is not overly different from a typical residential mortgage. Usually the one exception is the additional risk that lenders attach to non-standard mortgages, which might be passed on to borrowers by way of larger deposit requirements, higher rates of interest, and more rigorous affordability checks.
How to find non-standard construction mortgage lenders
If you need a non-standard mortgage, it’s often best to seek mortgage advice from a broker. You can then rely on their market knowledge to point you in the direction of a suitable lender. This could be a specialist non-standard construction mortgage lender, although there are often mainstream lenders that might consider your application too.
If you want to try for yourself rather than contact a broker, it could be worth talking to the current owner of the property to see which lender they might have a mortgage with, or neighbours if they live in the same type of property.
Given some types of non-standard construction homes are more likely to be found grouped in certain areas, it might also be worth approaching a local building society whose greater knowledge and experience of dealing with properties in the area may work to your advantage.
Image Source: Getty Images
Tim draws on 20 years’ experience at Moneyfacts, Virgin Money and Future to pen articles that always put consumers’ interests first. He has particular expertise in mortgages, pensions and savings. Read more