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Podcast approved by The Openwork Partnership on 18/10/2024.
Timber Framed Mortgage
Lee McAteer talks to us about mortgages for timber framed properties.
What is a timber frame property?
It’s quite varied in terms of what the end product could be. But timber framed constructions generally use prefabricated materials, made off site. The walls are normally filled with insulation materials and covered with exterior cladding, such as timber, brick or render.
Timber frame construction is popular, mainly in residential homes, and could be found in both traditional and modern designs.
It’s valued for sustainability, as timber is a renewable resource. It often allows more open interior spaces due to the strength of the frame, so it’s popular for bigger builds.
Is it difficult to get a mortgage on a timber frame house and how does it work?
Different lenders would view the property subject to their criteria, so it could be more difficult. Not every lender will kind of accept this type of build.
It just involves going to different lenders and looking at their criteria. Some will be happy with it, some not so much. It’s down to property type and how it’s made up – regulations could be more or less acceptable with different lenders.
It’s also down to the valuation and a lot of lenders will rely on the valuer’s comments. As a broker, we’d look at the different criteria with lenders and our experience with different types of builds we’ve looked after previously.
As long as the property could be insured, and it’s got the correct regulations and sign-offs, lenders are generally happy.
What are the different types of timber framed houses?
There are several different types. There are traditional and modern timber frames. They might be clad with brick or render, and there are also hybrid structures. Some of the modern designs are eco-friendly timber frame structures. They all vary.
Different lenders will accept certain options and perhaps not others. It’s all about doing the research with lenders to confirm which would accept your particular build.
Why are some lenders reluctant to offer mortgages for these properties? Are there many lenders that will offer a mortgage for a house with a timber frame?
There are plenty of lenders, but it’s more down to risk. Lenders view non-traditional constructions as riskier investments. Bricks and mortar tends to have more longevity – although modern timber frame properties should stand the test of time, as well.
It’s about the type of build and valuation. It’s likely lenders will send someone to have a look at the property to make sure it’s sustainable. Having the building regulations and sign offs is another concern with lenders.
What lending criteria do I need to meet for a timber framed property?
First of all would be the deposit. Some lenders will want a larger deposit, say 15-25% for non-standard constructions. There are some that you could potentially get a lower deposit, but in the main, you may need up to 25%.
It’s down to valuer’s comments as we’ve mentioned, and those building regulations and compliance sign offs. The age is important too. Older properties may be more acceptable as they’ve stood the test of time, but newer ones could be fine as long as they’ve got the correct regulations and insurance in place.
Loan sizes will depend on the size of the deposit and which lenders would be able to accept your application.
How much deposit will I need for a timber framed house mortgage? And how much can I borrow?
The deposit, as we’ve covered, will be 15% to 25% in the main. In terms of borrowing, it will be the same as on a standard property. You could usually borrow four to five times your annual income, and some lenders even go up to six times.
So it just depends which lender would accept the property in terms of how much you’re going to be able to to borrow.
As a caveat to that, you’re not necessarily going to get four, five or six times your income if you’ve got debts as well, such as car finance, or other commitments including childcare. We assess the affordability to confirm what you’d be able to borrow.
Can I get a Buy to Let mortgage on a timber framed property?
Yes, but not as many lenders will lend to a client looking to let the property out compared with someone planning to live in it. Your pool of lenders is smaller, and in buying a non-standard construction property, the pool of lenders is going to reduce further. So the answer is yes, but the lenders you could access will be limited.
Can I still get a mortgage on a timber frame property if I have bad credit?
Again, you’re going to have a limited pool of lenders that will consider the credit – depending how severe it is – and then the property as well.
Can I get a mortgage on a timber framed house as a First Time Buyer?
Yes, certainly. It’s the same as if you were buying it as your second or third home. You will be able to proceed as long as the property, your income and credit scoring meets criteria.
What costs may I have to pay to get a mortgage on a timber framed house property? Are they more expensive?
If we need to go to a specialist lender, they may have a higher rate than a high street brand. But there’s no other additional cost to pay for a non-standard construction home.
You just need to make sure throughout the process that you have the right certificates and insurance in place, so that when you sell that property, you’re not going to encounter any issues going forward.
What are the pros and cons associated with buying a timber frame home?
Pros include sustainability, energy efficiency and quicker and more flexible construction. There could also be advantages around the design options.
The cons could include higher maintenance and insurance costs, potential issues with durability, and finance. It’s all about picking the right option for you.
How can a mortgage broker help here?
A mortgage broker could help a lot, especially when you’re buying a timber frame home due to the challenges associated with financing a non-standard construction property. We could help you navigate the different lenders in the market, whether that’s high street or specialist lenders, and give you options.
There are certain lenders we could access that the public can’t reach. So to make sure you’re making an informed choice, speak to a broker and get some advice.
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
MOST BUY TO LET MORTGAGES ARE NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY.
Approved by The Openwork Partnership on 18/10/2024.
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