"There are many different construction types of homes in this country, and it is important that lenders know what they are lending on."
When it comes to the types of property that lenders will lend on, it can best be described using Forrest Gump’s wisdom – Life’s like a box of chocolates. You never know what you are going to get.
All lenders want to know if the property is safe to lend on and that they would they get their money back if repossession occurred, however unlikely that may be. But each lender has different risk appetites, and this will mean there can be significant differences between what they can accept and what will simply be outside criteria.
A really good example of this surrounds non-standard construction where lenders typically fall into three categories – those who will not consider non-standard construction, those who can consider it based on acceptable comments from their surveyor and those who will accept it. The last example are typically more specialist lenders like LiveMore.
Brokers are not expected to know every lender’s property criterion, unless perhaps you have a photographic memory; but having an idea of which lenders will be more accommodating towards unusual property construction can be helpful.
At LiveMore, we accept a wide range of non-standard construction types and can consider, on an individual basis, other construction types by working closely with our surveyors and the broker.
What do lenders look for?
All lenders will look for the property to be marketable and mortgageable, so that when a property is sold, that process can happen quickly and without significant expense. When lenders and surveyors assess construction, this involves the materials and framework of the property, the roof, the walls, and the land.
Framework
One of the more common non-standard materials is timber frame and the quality varies often dependent on age. Timber frame covers various construction methods from properties built entirely of timber, to timber frame with outer coverings such as brick, reconstituted stone and block including rendered walls.
Generally, lenders tend to prefer newer properties as the perception is they considered as safe to lend on. Having said that, at LiveMore will consider historic timber framed property in areas of high marketability such as historic towns.
A less common construction type is steel framed construction. As a result, this is often outside some lenders criteria but at LiveMore, we can accept if built after 2000. If built before then, as with more unusual concrete panel construction, we can look at individual cases but may stipulate a 40% LTV limit.
Roof
The type of roof and materials used that are acceptable to lenders also varies but generally pitched roof made of slate or tile is suitable across all lenders.
More unusual types, such as thatched or shingle can be considered by specialist lenders, provided the surveyor considers the property to be suitable mortgage security, as is a flat roof as long as warranties or guarantees are in place.
Walls
Whilst the most common wall material is brick, specialist lenders can accept a wide variety of wall materials including prefabricated reinforced concrete (PRC) where the valuer confirms that saleability is unaffected, and the property has been repaired under a PRC Home Limited approved scheme with a 10-year guarantee.
There are some materials we will consider on a case-by-case basis up to 40% LTV, subject to individual assessment such as insubstantial materials like thin boarding, rendered board and prefabricated properties.
Unfortunately, along with many other lenders we can’t lend on properties with walls containing asbestos.
Land
But it’s not just the building that lenders have to consider, there is also the land the property is built on. Factors that lenders will consider are often whether the property is in a mining area, close to power lines / substations or in proximity to contaminated land. Taking the contaminated land as an example, LiveMore will consider properties that are 500 metres or more from contaminated land whereas a number of lenders have much wider distance requirements.
There is also contiguous land, which is parcels of land that touch one another or are separated only by public access such as a road. Property on contiguous land is often acceptable but again it will usually depend on the surveyor’s comments.
Specialist agricultural lenders are available to provide finance on property on farms but often this will be on commercial interest rates which tend to be higher than a residential mortgage. We will consider lending on farm houses with up to 10 acres of land. This is providing there are no agricultural restrictions or properties that are independent on commercial farming.
Former social housing
There are many ex-council houses in today’s market under homeownership, due to the Right to Buy scheme launched in 1980. Government figures suggest around two million homes have been bought under the scheme.
Most lenders will consider lending on ex-council and ex-housing association properties as long as the valuer deems the property to be suitable security, but there can be exclusions, particularly for flats. For example, many lenders won’t lend on open decked flats, where a walk-way balcony leads to the front door. Again, this is an area where specialist lenders like LiveMore can make a real difference and offer wider acceptable criteria.
In summary, there are many different construction types of homes in this country, and it is important that lenders know what they are lending on. This article gives a flavour of what can and can’t be done but at LiveMore, we try to be flexible as possible with unusual property types.
