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How The Property Type Can Affect a Mortgage Application

No impact on credit score

Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: August 5, 2021

In this article we’ll be taking a look at how property type affects your chances of being offered a mortgage, as well as some of the factors that can make it harder to secure a mortgage including unusual construction types, flats above commercial premises, maisonettes, ex-council homes, listed buildings, bungalows and more.

How does property type affect a mortgage application?

Property type is one of several factors that lenders consider when assessing mortgage applications, so it will inevitably have some impact on any offer you might receive, even if there’s nothing unusual about the property. For example, most mortgage providers have different lending policies for houses and flats, even those of standard construction type, and will generally apply stricter criteria for flats.

In addition to material construction, there are several other issues relating to property type that can affect your application. These include location (e.g. is it above a shop or restaurant), age of the property, listed status, overall state of repair and many other factors detailed below.

Generally speaking, the more unusual or non-standard features a property has, the harder it will be to find a willing lender, because these properties have different risks, are typically  more expensive to insure and can be harder to resell. But every lender is different, and will have its own view on each non-standard element.

Standard construction properties

While the exact definition can vary from one lender to the next, ‘standard construction’ usually means a property that has been built with the familiar brick walls, tiled roofing with a pitched (i.e. not flat) roof and concrete foundations. Most properties in the UK fall into this category, and those that deviate from it are likely to be classed as ‘non-standard’.

Getting a mortgage on a non-standard property

In many cases, it’s possible to get a mortgage on a ‘non-standard’ property, but it can be more difficult compared to securing finance to buy a traditional house.

There are a number of caveats depending not only on what makes the property non-standard, but also on your own risk profile as a borrower. In other words, your statistical probability of being able to repay the lender when assessed against their eligibility criteria.

In any case, to increase your chances of being accepted, you should speak to a specialist broker who knows which lenders are most amenable to the particular non-standard features of the property you’ve set your sights on. Many of the lenders that offer non-standard construction mortgages do not deal directly with the public, so you will save time (and avoid marks on your credit rating) if you work with a mortgage broker from the start.

What if you’ve got bad credit?

If you think there may be other issues that could affect your overall risk profile in the eyes of the lender such as a history of adverse credit, you may find that the pool of willing lenders becomes even smaller, and you’re likely to be offered more punitive interest rates or turned down altogether.

The advisors we work with have strong experience of arranging mortgages on behalf of customers looking to buy properties of all types, even with a less than perfect credit record.

What are non-standard construction types?

If you’re unsure if your prospective new home falls outside the standard category, the following sections should give you an idea of what’s considered to be non-standard by many lenders. These features may or may not be obvious, and a chartered surveyor is best placed to confirm which materials have been used.

Typical non-standard property types in the UK

The following construction types are among the more widespread and recognisable examples of non-standard property found around the UK. In some cases these properties can be renovated to bring them in line with standard regulations, but most lenders will want to see proof that this work has been carried out in the prescribed manner.

  • Wimpy no fines: Houses, bungalows and low-rise flats, most built in the 1940s-50s to address the post-war housing crisis. Made using a type of concrete without sand.
  • BISF Construction: Another post-war property type made with steel frames and roofs, these houses can suffer structural deterioration and may contain asbestos. Around 50,000 survive in the UK.
  • Cornish unit: these houses have precast reinforced concrete walls up to the ground floor with the upper storey within a distinctive roof. They can be susceptible to problems with insulation and structural integrity if not correctly refurbished.
  • Prefabricated steel (“prefab” construction): Bungalows made from concrete panels reinforced with steel. Intended as temporary housing, these are now relatively rare. They include Airey Houses, Reema Houses and several other variants.
  • Cob construction: ‘Cob’ is a traditional building method that uses organic materials including subsoil, clay, water, straw and sometimes lime. While unusual, these properties can be extremely tough and the method is enjoying a small scale revival as a method of building eco homes.
  • Eco homes: This term refers to a wide range of sustainable construction types but as mentioned above this often means non-standard materials such as timber frames, so a property described as an eco-home may require a specialist mortgage.
  • Modular homes are properties that are delivered partially pre-built, can be made from a variety of materials (including recycled structures such as shipping containers) and are often categorised as prefabs.

Even if your property is NOT among the types listed above, it will be classed as non-standard by many lenders if its composition includes one or more of the following building materials:

Non-standard Wall types

Walls made from any material other than brick or blocks, e.g.

  • wattle-and-daub
  • wood
  • logs (log cabins)
  • glass
  • metal
  • concrete
  • corrugated iron
  • plastic
  • asbestos
  • organic materials

Non-standard Roof types:

Anything other than tile or slate with a slope is likely to be non-standard.

This includes:

  • thatched roofs
  • shingle
  • fibreglass
  • glass
  • timber
  • asbestos
  • flat roofs
  • concrete roofs
  • steel roofs
  • stramit
  • felt
  • plastics
  • various eco-friendly roof styles

Mortgages for flats

Most flats present no major obstacles when it comes to getting a mortgage, however there are several different categories of flat, and the type you are buying will affect the number of providers willing to lend. For example:

Studio flats

Demand for studio flats or bedsits is lower for flats with separate bedrooms, and this affects their resale potential. However, there are lenders who will consider studio flats, and the advisors we work with can help you find them. Depending on how well you meet the lender’s criteria It should be possible to get a mortgage on a studio flat provided it’s in acceptable condition and within minimum size limits (usually 30 square meters); find out more in our guide to studio flat mortgages.

High Rise flats

Flats on a 5th floor or higher are usually classed as ‘high rise’ and many providers will be reluctant to lend on them, especially if there isn’t a lift. However there are some that will lend on flats on any level of a block, so if you have a head for heights and are thinking of buying a flat on the 6th floor or higher, get in touch with us and we’ll find you an advisor with a track record of arranging mortgages on high rise flats.

Maisonettes

The term ‘maisonette’ can be used in various ways however it usually refers to a larger flat spread across two or more floors. While the term literally means ‘little house’, a maisonette is classed as a flat for mortgaging purposes, so you will need to take out a flat mortgage if you’re buying one.

Flats above commercial premises

It’s usually possible to get a mortgage on a flat above a shop or other commercial premises, but whether or not you’re accepted and the interest rates you’re offered depend on a variety of factors including the nature of the commercial business, the lender’s individual policy on commercial premises and how well you meet their eligibility criteria.

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Other property types

In addition to building materials and construction type, there are several other issues relating to property type that can make finding a mortgage more of a challenge. Read on for some examples:

Mortgages for bungalows

A bungalow is not necessarily considered to be non-standard in itself, but there have been trends for building these properties from materials that can fall into this category, and they can be harder to mortgage unless they have been modernised. The non-standard types include Woolaway, Dorran and Colt bungalows .

Repossessed properties

If you’re thinking of buying a property that has been repossessed, you should not need to take out a specialist mortgage, but you may need to be ready to act quickly. Repossessed properties are often sold at auction at a heavily discounted price, in which case you are likely to be beaten to it by a cash buyer if you don’t have a mortgage ready to go.

It is also more likely that a ‘repo’ property will have been vacant for an extended period and may have fallen into disrepair, so this could slow down the process especially if surveys throw up any major issues.

Freehold properties

Whether you can get a mortgage will depend mostly on whether the property is a house or a flat, and on the type of freehold setup. Most houses sold in the UK are freehold and this is therefore a very straightforward proposition for lenders. Flats are usually leasehold, while some blocks have a ‘share of freehold’ in place which is usually viewed as a leasehold for mortgage purposes and should not cause additional complexity.

Freehold flats are a different matter entirely, and mortgage providers are generally reluctant to lend on them – they are also very rare. This is because there is no contract in the form of a lease setting out responsibilities for upkeep of the property, so maintenance of the flat and its neighbouring properties is entirely at the whim of the residents, with no legal obligations. This tends to result in higher rates of neglect. The exception to this is flats in Scotland as leasehold is very rare north of the border.

Dilapidated properties

For those who want to take on a serious building project, there are some specialist products designed for those purchasing properties that have fallen into a state of disrepair. Some also offer incentives to renovate old and unloved properties to be more energy efficient and to use more sustainable materials, so you may be able to get an additional loan to help you cover the costs of making your new home habitable.

It’s worth noting that in a lender’s eyes, ‘uninhabitable’ means not having a working kitchen or bathroom, and/or watertight roof – in the absence of any major structural problems, anything else is likely to be considered cosmetic and is unlikely to affect their willingness to lend.

Undervalued properties

What are your options if your mortgage valuation comes back lower than the offer you’ve put in? In this situation it’s not usually worth arguing with the lender about their valuation. Your options are to renegotiate with the seller, stump up the difference between your offer and the valuation amount in cash. You could start the process again with another lender but you’d run the risk of the same thing happening again . Find out more in our guide to undervalued properties.

Ex-council properties

Ex-council or ex-local authority properties can be great value especially for those looking to get on to the property ladder for the first time, but they can be slightly harder to mortgage as not all lenders will accept them. This is often due to other factors mentioned in this article, such as being located in high rise blocks or non-standard materials like concrete, but in the absence of such issues there should not normally be significant obstacles to getting a mortgage, especially in more sought-after estates where resale value is strong.

Listed buildings

Buying a listed property sounds like quite a privilege, but the practical realities of such a purchase are not always plain sailing. This may be due to the fact that many of these properties fall into lenders’ non-standard categories (e.g. timber frame, unique architecture or significant age), but it’s also to do with the restrictive covenants that are placed on listed buildings and the complications they can cause.

Live-work units

With remote and freelance working practices becoming more mainstream, live-work units are an attractive prospect for many – but can you buy one with a mortgage? The good news is that there are several specialist lenders as well as high street providers that will now consider them, but you’ll certainly benefit from working with a specialist to find the right deal for you, and you’ll have to convince the lender you won’t breach planning permission by using a live-work space solely as a home.

Properties with two kitchens

Properties with more than one kitchen and/or an ‘annex’ or ‘granny flat’ can put off many lenders because they are more likely to be illegally sublet. From the mortgage company’s perspective this arrangement effectively constitutes two properties, which is why many applications for annexed properties are declined.

However some are prepared to be more generous, particularly if you can demonstrate that 2 kitchens are for religious reasons, and if they’re behind a single front door.  Speak to an expert to find the most amenable lenders.

Off-plan purchases

Buying off-plan poses unique risks to lenders because it involves the purchase of a property that has not yet been built, which can make the valuation a lot less accurate. The risk to you as a buyer is that building work can take longer than expected while most mortgage offers expire after 6 months.

However, more lenders are agreeing to off-plan mortgages, and there are even some products with extended validity periods to allow for slipping timelines. The brokers we work with can help guide you towards these lenders, so you won’t have to waste time looking.

New build properties

Buying a new build property whether off-plan or fully constructed, is another scenario that makes some lenders nervous due to difficulty of valuation, and there may be unusual materials and/or high rise status to contend with, too.

However the new build market is relatively strong at the time of writing and more lenders are moving into this area and there are also a few new build specialist lenders: the advisors we work with can point you towards these providers – find out more in our guide to new build mortgages.

Luxury property

For those lucky enough to buy a more lavish property than most, there can still be unexpected hurdles when securing a mortgage. Most mortgage providers cap lending at around the £3 million mark, but if you are planning to borrow any seven-figure sum it is worth exploring the specialist market as well as high street lenders, as the better known players are more likely to insist on spotless profiles and impose more stringent criteria the larger the loan amount. Take a look at our guide to £4 million+ mortgages to find out more.

Chateaus

If you’ve set your sights on a dream castle and are hoping to finance it with a mortgage, you may have a struggle on your hands as these are often among the most expensive properties on the market (French chateaux have sold for as much as £300 million). These properties are generally bought by high net worth individuals and in cash.

Cottages

If you want to embrace a rural lifestyle and buy a country cottage, mortgaging options will depend on the finer details of the property itself (e.g. does it have a thatched roof, cob construction or any other non-standard materials?) how you intend to use it (i.e. is it a holiday home that you might let out, or purely a residential property?) and whether or not it’s a second property. All of these factors will affect the type of mortgage you need, so it’s worth seeking professional advice before you apply. Find out more in our guide to cottage mortgages.

Get matched with an expert on mortgages for all property types

If you’re in the market for an unusual property and want to go straight to the most suitable lenders, we’d be happy to put you in touch with a specialist broker with experience of the type of property you are looking to buy. Give us a call on 0808 189 2301 or make an enquiry and we’ll be happy to assist you.

We only work with accredited brokers who have access to the whole mortgage market, as well as a great track record in successfully arranging remortgages for our customers, who have consistently rated us 5 stars on Feefo for service and quality of advice.

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About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

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FCA disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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