Non-standard construction mortgages (A 3 point guide)
Non-standard construction refers to a property where unconventional material is used.
With Non-conventional properties, you may still need to get a mortgage (known as a non-standard construction mortgage) if you aren’t a cash buyer.
Non-standard construction mortgages will usually have lower loan to value rates, higher mortgage deposit requirements and higher APRs.
Types of Non-standard construction
Mortgage lenders may consider the below as non-standard construction property:
Flats located in high rises
Listed country cottages
Less known types of Non-standard construction
There are also some less known types of Non-standard construction, they include:
‘K Lath’ construction mortgages
‘K Lath’ is a kind of reinforced mesh, used to reinforce cladding and stucco walls. The term is usually used to describe a lot of reinforced Lath construction techniques.
‘Clay lump’ construction mortgages
Clay lump is most associated with houses in Norfolk and was very popular between 1700 and 1900. Most clay lump construction homes have not been well maintained and you will find a lot of the homes being patched with modern parts such as cement and bricks.
‘Cob’ construction mortgages
Cob is a type of construction that was particularly popular in Southwest England and Cumbria.
It typically uses a clay mix, in which crushed flint or sand is added to give strength and volume. It’s seen something of a resurgence lately as a green building technique.
What is a non-standard construction mortgage?
Non-standard construction mortgages are mortgage needed when you want to purchase a property that doesn’t have a standard construction. This could be because of the materials used or the way the property was built. construction is the term used to describe a property that isn’t common
Non-standard construction mortgages are a specialist type of mortgage and you may be able to find them on the market. In any case, a mortgage broker may be able to help you.
If you want to buy a property with material that may be defined as non-standard or the way it was built was nin-standard then you may need a non-standard construction mortgage.
what is a standard construction property?
Standard construction property in the UK mortgage market is a property which is built with brick, has a concrete foundation and has a tiled roof. Anything outside of this specification may be considered as a non-standard construction to a mortgage lender and may need a non-standard construction mortgage
Can you get a mortgage on a non-standard construction property?
Yes, there are specialist mortgage lenders out there who may be willing to offer you a non-standard construction mortgage but you may need a specialist mortgage broker to advise you on your mortgage options.
Non-standard construction property doesn’t necessarily mean that the property is at any risk but due to the fact that it is non-standard, many mortgage lenders prefer to categorize it and offer non-standard construction mortgage which you may be more suited to the property.
Non-standard construction mortgages don’t necessarily mean you will have to pay more than a standard residential mortgage but the mortgage lender may undertake more detailed property surveys and may offer a much lower loan to value on the property.
Maintenance of non-standard construction properties
Non-standard construction property can be much more expensive to maintain and when you seek a non-standard construction mortgage the mortgage lender may take this into account when deciding if you pass their mortgage affordability requirements.
You may need to replace certain things after a number of years.
If you fail to maintain your non-standard construction property you could find that things begin to become faulty and the property may lose value.
This is bad for you and the non-standard construction mortgage lender.
Insurance of non-standard cosntruction properties
Another major issue with non-standard construction properties is that it may be much harder to get insurance for them.
This could affect your ability to get a non-standard construction mortgage as most mortgage lenders will want you to have an insurance policy before you exchange contracts or complete on the mortgage.
You may still be able to get non-standard construction insurance by using specialist insurance brokers who can search the market and find you the appropriate mortgage.
Converting your non-standard construction property to be mortgaged.
If you want to buy a property and realise the mortgage lender will not lend to you because it is classed as a non-standard construction property you may be able to make a few changes to it or ask the seller to make a few changes to it if the mortgage lender agrees or suggest which may make the non standard construction property easier to get a mortgage on.
In some cases, the mortgage lender will offer you a mortgage under the guarantee that you will make the necessary changes. Some non-standard construction mortgage lenders may want to see proof of the work process starting before they finalise on the mortgage. This could be a quote for the work needed to be done or proof of funds for the work.
When converting a property the mortgage lender may focus on what you need to do to move the property into the ‘standard’ category or significantly reducing the amount of structural risk associated with the property.
The work needed may be as simple as steel reinforcements to make the property safer and reliable. The work will usually be done as part of a certified repair scheme for a mortgage lender to accept it and can be costly.
They may be difficult to sell
A big issue and reason why many mortgage lenders do not lend to non-standard construction properties could be because of how difficult it may be to repossess the property if you fail to keep up on your monthly mortgage repayments and then sell the property.
Selling a non-standard construction property could be harder as there may not be a big enough market for them and you may have to discount the property to get a sale.
Mortgage lenders also consider the fact that a potential buyer in the future may find it difficult to get a mortgage on a non-standard construction due to the mortgage market changing and fewer mortgage lenders being available.
This could mean that the non-standard construction property then becomes much harder to sell.
Mortgage lenders will require indepth property surveys
Mortgage lenders may require an in-depth property survey on specific parts of the non-standard construction property to ensure that everything is alright. They will also pay close attention to the details of any survey or valuation carried out and may likely request further surveys to figure out anything which may be a concern in the future.
Can you use a government scheme with a non-standard mortgage?
You may be able to use some of the home mover and first-time buyer government schemes which are available to get a non-standard mortgage but this will depend on if the scheme accepts new build homes only or specific homes from specific providers.
You may need to check with the scheme providers to see if they accept the sort of property you want to use the scheme on.
Non-standard construction mortgage lenders may be willing to lend to you if you have a home mover or first-time buyer government scheme.
Some of the government schemes which are available include:
- Lifetime ISA– gives you a government bonus of £1,000 if you save a maximum £4,000 a year.
- Help to buy ISA– gives a maximum bonus us £3,000 if you save the maximum allowed of £12,000. Before you get either you should consider which is better. Lifetime ISA vs Help to buy ISA.
- Help to buy equity loan– gives you up to 40% as a 5-year interest-free equity loan. You begin to pay interest at 1.75 % after the fifth year and 1% plus RPI for every year thereafter.
- Shared ownership– You can buy between 25% to 75% of the property initially with a shared ownership mortgage and then buy more using a staircasing mortgage.
- Armed forces help to buy– similar to the help to buy equity loan but specific for the armed forces personnel giving them an increased chance of acceptance.
- Rent to buy– This is the right to buy scheme on which this guide is currently discussing. A different marketing name is just used. Watch out for this when shopping to avoid missing out on eligible properties due to confusion.
- Right to buy– allows you to buy your home at a discount price.
- Preserved right to buy– same as above.
- Right to acquire– similar to the above.
Depending on where you live, you may also be able to take advantage of home buying schemes provided by your local council. Example: In Norwich, the local councils provide the Norwich home options scheme.
Use a mortgage broker for your mortgage in principle
You may want to use an independent mortgage broker to help you get a mortgage on your new home.
Mortgage brokers are important as they can access mortgage products from across the whole of the market in some cases.
This could be over 11,000 mortgage products. This may have some advantages rather than going directly to a mortgage lender.
A mortgage broker will look to understand your financial circumstances and then provide recommendations on which mortgage products may be suitable for you based on your mortgage affordability.
After giving you these mortgage recommendations, most mortgage brokers will seek your consent to apply for a mortgage in principle.
This will allow you to shop for your home as more estate agents and sellers may take you seriously and it will also give you confidence that your mortgage is indeed a possibility before you make a full mortgage application.
Once you have found a home you want to buy and are satisfied with the mortgage offer for your mortgage then the mortgage broker will then look to get you a mortgage offer.
This will come with a key facts illustration document that details the features of your mortgage including how much you will pay per month.
It will also contain information on if there are any limits such as early repayment fees, or annual overpayment limits.
If you are happy with everything you can then go on to secure your mortgage with the help of a conveyancer.
Your conveyancer will manage the legal searches on the property to ensure there aren’t any issues with it.
They will oversee the sales agreement to ensure it is in your best interest, they will manage the transfer of mortgage funds, exchange contracts with the seller or their conveyancer, and set a completion date with the seller or their conveyancer.
This will then bring an end to the conveyancing process, at which point you will receive the keys to the house and move in.
If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.
You can also contact the debt charity “Step Change” if you are in debt and need help.