Non Standard Construction Mortgages

Non Standard Construction Mortgages

Our guide for borrowers on Non standard construction mortgages covers everything you need to know.

When it comes to buying a home, most people imagine a traditional brick-and-mortar structure with a standard foundation, roof, and walls. However, not all homes are built the same way. Non-standard construction mortgages are designed to help buyers finance homes that are not constructed using traditional methods.

In this article, we will explore what non-standard construction mortgages are, the types of properties that qualify for this type of financing, and the requirements borrowers need to meet to qualify for a non-standard construction mortgage.

What Are Non Standard Construction Mortgages?

Non-standard construction mortgages are home loans designed to help borrowers purchase properties that are not constructed using traditional building methods. These homes are often built using unconventional materials or construction techniques and can be difficult to finance using traditional mortgage products.

Examples of non-standard construction homes include properties built using straw bales, timber frames, or prefabricated components. Other examples include homes built on stilts, floating homes, or properties constructed using eco-friendly materials.

To qualify for a non-standard construction mortgage, borrowers must demonstrate that the property meets specific criteria related to its construction. Lenders will typically require a property inspection to confirm that the home is structurally sound and meets the lender’s guidelines for financing.

Types of Non Standard Construction Mortgages

There are several types of non-standard construction mortgages available to borrowers, each with its own set of requirements and benefits. Some of the most common types of non-standard construction mortgages include:

  1. Self-Build Mortgages: Self-build mortgages are designed to help borrowers finance the construction of a new home. These mortgages typically provide funds in stages as the construction progresses and require borrowers to have a detailed plan for the construction of the property.
  2. Renovation Mortgages: Renovation mortgages are designed to help borrowers finance the renovation of an existing property. These mortgages can be used to finance major renovations, such as adding an extension or updating a property’s electrical or plumbing systems.
  3. Modern Methods of Construction Mortgages: Modern methods of construction mortgages are designed to help borrowers finance properties constructed using non-traditional building methods, such as prefabricated components or modular homes.
  4. Timber Frame Mortgages: Timber frame mortgages are designed to help borrowers finance homes constructed using timber frames. These mortgages can be used to finance the construction of a new timber frame home or the renovation of an existing timber frame property.
  5. Certain construction types such as Reema construction, Wimpey construction etc.

Requirements for Non Standard Construction Mortgages

To qualify for a non-standard construction mortgage, borrowers must meet certain requirements related to the property’s construction and their own financial situation. Some of the most common requirements for non-standard construction mortgages include:

  1. Property Inspection: Lenders will typically require a property inspection to confirm that the home is structurally sound and meets the lender’s guidelines for financing. Borrowers may also need to provide documentation related to the property’s construction, such as building plans and permits.
  2. Down Payment: Non-standard construction mortgages typically require a larger down payment than traditional mortgages. Borrowers may need to provide a down payment of 20% or more to qualify for this type of financing.
  3. Income and Credit Score: Borrowers will need to demonstrate that they have a stable income and a good credit score to qualify for a non-standard construction mortgage. Lenders will typically require proof of income, such as pay stubs or tax returns, and will review the borrower’s credit history and credit score.
  4. Appraisal: Lenders will require an appraisal of the property to determine its value and ensure that it meets their guidelines for financing. The appraisal may take into account the unique features of the property, such as the materials used in its construction or its location.
  5. Insurance: Borrowers will typically need to provide proof of insurance to qualify for a non-standard construction mortgage. This may include homeowner’s insurance, flood insurance, or other types of insurance required by the lender.

Benefits of Non Standard Construction Mortgages

While non-standard construction mortgages may have more stringent requirements than traditional mortgages, they also offer several benefits to borrowers. These benefits include:

  1. Access to Financing: Non-standard construction mortgages provide borrowers with access to financing for properties that may be difficult to finance using traditional mortgage products. This can be especially important for borrowers looking to purchase a unique or unconventional property.
  2. Customization: Non-standard construction mortgages allow borrowers to customize their home to meet their specific needs and preferences. This can include choosing materials that are eco-friendly or energy-efficient or incorporating unique design features into the property.
  3. Investment Potential: Non-standard construction homes may have unique investment potential, especially if they are constructed using eco-friendly or sustainable materials. These types of properties may appeal to buyers who are interested in reducing their environmental impact or who are looking for unique investment opportunities.
  4. Potential for Lower Costs: Non-standard construction homes may have lower maintenance and operating costs than traditional homes, especially if they are constructed using energy-efficient materials or methods. This can result in lower monthly expenses for homeowners.

Conclusion

Non-standard construction mortgages provide borrowers with access to financing for properties that may be difficult to finance using traditional mortgage products. These mortgages can be used to finance the construction of a new home or the renovation of an existing property and are designed to meet the unique needs of borrowers purchasing non-standard construction homes.

To qualify for a non-standard construction mortgage, borrowers must meet certain requirements related to the property’s construction and their own financial situation. While non-standard construction mortgages may have more stringent requirements than traditional mortgages, they also offer several benefits to borrowers, including access to financing, customization, investment potential, and potential for lower costs.

If you are interested in purchasing a non-standard construction home, it is important to work with a lender who specialises in this type of financing. A knowledgeable lender can help guide you through the process and ensure that you have access to the financing you need to purchase the home of your dreams.

We hope you enjoyed our article on Non-standard construction mortgages. If you have any more questions get in touch.

A mortgage article by Mark Robinson – Mortgage & Equity Release Broker

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