Non Standard Construction Mortgage
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Mike Haupt – Mortgage Adviser
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Non-Standard Construction Mortgage
Mike Haupt explains non-standard construction mortgages.
What is a non-standard construction mortgage?
A non standard construction mortgage is basically a mortgage on a property that falls into the non-standard construction definition. That’s essentially anything not built from bricks with a slate or tile roof. You may need a bit more of a specialist mortgage on that type of property.
What kind of properties fall into this category?
Pretty much anything you’ve ever seen on Grand Designs is non standard construction. Typically it means properties made of steel, timber, concrete frame or older properties like cob houses. It’s anything built in non standard ways.
What types of construction are considered non standard?
Non standard construction can be really creative. We’ve all seen some amazing buildings. The benefit is to create something really unusual – and that typically means using things other than brick and tile; the traditional way of building houses in this country.
Big steel frame construction properties are an example, as are timber frame properties. It’s typically cheaper and faster to build non standard construction properties. A lot of post -War buildings in the country were built with reinforced concrete panels.
So these, along with timber and steel frame properties fall outside typical standard construction. They all need a more specialist kind of mortgage.
What are the main challenges of securing a non-standard construction mortgage?
The good thing is a lot of lenders now are really open to non standard construction properties. More and more people are building their own properties and lenders are aware that new building methods can be quicker, cheaper and more environmentally friendly than brick and tile. So, increasingly, lenders are a lot more open to that.
The challenge is that the property still needs to provide suitable security to the lender. If they don’t feel that that building is the right security for their criteria they will refuse to lend on it.
It just means we have to do a bit more research from the outset, to make sure lenders will be happy. They’ve generally got a big list of buildings that are acceptable to them, but some may fall outside that criteria. It’s just about getting to know the lenders and making sure they understand the building that you’re looking to buy or build.
How does the approval process for non standard construction mortgages differ from a traditional mortgage?
The approval process is very similar in some ways and very different in others. The part about you as the customer is exactly the same regardless of the property type. They’re going to look at your affordability the same way.
The difference comes once they do a valuation on the property. A surveyor goes on behalf of the lender to make sure that they’re comfortable with that building. At that point they may want a bit more evidence to decide if they are prepared to sign off the building for lending purposes.
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Are there any specific requirements for borrowers looking to secure a non standard construction mortgage?
No, there are no specific requirements. Typically you’ve got to meet the lender’s criteria as a borrower, so we’ve got to cover that bit off. The rest is down to the property. Any information you can get beforehand always helps, especially if you’re looking at things like concrete properties.
Certain types of concrete properties are not acceptable to any lender. So we really need to understand how that property was built. Typically, the local estate agent will know the market if there’s a lot of non standard construction.
Here in Wiltshire there’s a lot of non standard construction and the agents know a lot about the different types. If it’s been a self-build or there’s been a lot of work done, the current owners will probably know a lot about it. They can give you a lot of information.
How can borrowers improve their chances of being approved for a non standard construction mortgage?
On the notes I’ve written for today I’ve put “research, research, research, research.” That’s about talking to the vendor about the build, and also working with people like myself who have a really good understanding of the mortgage market.
We can start doing that work early – it’s about talking to multiple different lenders to find the best option for you. You don’t want to end up going to five different mortgage companies because we didn’t quite get the right information at the start.
How do lenders assess the value of a non standard construction property?
It all comes down to the survey. As we mentioned earlier, once the lender says that they are happy to lend to you, they instruct the mortgage valuation. That initial valuation is very much for their purposes, to check the property is worth the price. It’s also about meeting the property criteria.
With a non standard construction property, there might be a number of other questions that come about. The lender might want additional reports. Or they may just say that they have a history of lending on these properties and are fine with it. No need for anything else.
What deposit is typically required for a non standard construction mortgage?
There isn’t a set minimum. Different property types have potentially different deposit criteria, but generally the lender will look at the property and confirm if they are happy to lend on it.
They don’t expect a different deposit because it’s non standard construction. They look at you as the individual and then the survey on the property. It’s a yes or no situation. The deposit isn’t relevant.
It’s very much down to your individual circumstances: how much you need to put in to make it affordable.
Are interest rates generally higher for non standard construction mortgages?
No, they’re not. There are no specific mortgage products in this area, which means all the mortgage products are available to you. Whether it’s a purchase or a remortgage, they’re all available to you.
Lenders compete against one another to win your business, ultimately giving you the cheapest available rate. So it’s really good for you as the customer it means you’re going to get the best possible rates.
How long does the application process typically take for a non standard construction mortgage?
It all comes down to the valuation. If the lender has a good history of lending on these properties, there are no issues and they are happy to sign it off, there’s no difference in timescales from application to offer.
But if the surveyor feels that a couple of extra reports are needed, that could slow things down a bit. Again, that’s something we would talk about from an early stage, when we start looking at your mortgage application. We would always explain that it may just take a little bit longer. There may be a few extra questions to work through from the lender.
What advice would you give to someone looking to secure a non standard construction mortgage?
Do your homework. Find out as much as you can about the property you’re looking to buy, the area and whether it’s a good investment for you. Then talk to us here at Tomorrow Mortgages as soon as possible so we can start doing our research to find the right lender for you.
Your home may be repossessed if you do not keep up with your mortgage repayments.