Mortgage restriction may apply due to nontraditional construction ?

farhadonly

Hi all,
I need some advise to buy a new house. I am a first time buyer and trying to buy a cheap house/flat. I found a cheap house but the selling agent says,
" due to non-traditional construction, mortgage restrictions may apply, but our indeendant mortgage advisor could help you to get a suitable mortgage"
What does these mean?
This is a house. If I buy this house, is there any problem? Please explain me in details. I don't know anything about mortgage restrictions and so on... I like the house and want to buy that but worried about that restriction things. If I get mortgage should I buy that house?
Thanks.

david29dpo

Alarm bells rang when you said "our mortgage advisor could help" Is he thinking of you or his commission?

Richard_Webster

due to non-traditional construction, mortgage restrictions may apply, but our indeendant mortgage advisor could help you to get a suitable mortgage"

Fewer lenders will lend on non-traditional houses and they may restrict the loan to value ratio that they will lend. It will depend on what kind of non-traditional construction it is.

There are some PRC houses( I think that stands for "pre-cast reinforced concrete") that can only be mortgaged with very few lenders indeed who will sometimes want to make sure that certain repairs etc have been carried out. Given that they have made a point of it in their advertising, it does suggest that it is a PRC house where there may be only one or two lenders prepared to touch them and the interest rates may not be all that special or their criteria for assessing ability to repay may be strict.

That can be a factor when selling - the property may be quite difficult to sell. Also do not assume that the percentage difference in value between a non-traditional house and ordinary house of the same size in the same area will stay the same. Houses with something adverse will sit below something better when the market is going up but when the market has gone down and people can more easily buy a more normal proeprty the percentage "discount" for the non-trad property could increase and the hose could be very difficult to sell

There are other types that will attract mortgages from a number of the "high street" lenders, but some less well known lenders, who will lend higher than average income multiples, or lend to people with a bad credit record, will not touch them.

Obviously using the estate agent's financial advisers has its down side, but you do need to be careful. This is the sort of point that will confuse some financial advisers, who might not appreciate there is a possible problem, so going to the agent's people may not be a totally bad idea because the agent will want to make sure the deal goes through and will not be pleased with a financial adviser who gets you to complete a mortgage application which is then turned down because of the non-traditional construction. So the adviser is more likely to get it right.

poppy10_2

Is it a concrete house?

farhadonly

poppy10 wrote: »

Is it a concrete house?

No. It made by metal and wood. 3 bedroom house.

Running_Horse

Learn to live with the disappointment, and move on.

trulysaintly

Firstly, do not feel pressured into seeing the EA's Financial Adviser.

Biggest trick in their book, and many estate agency based advisers do not have access to the whole mortgage market, which would be getting you at a disadvantage at the beginning.

Approach an Independent Mortgage Adviser - better placed to offer you guidance on the whole market.

Secondly, find out from the local council (as many of these are ex-council based) what the name of the build is. Go through to the Housing department as a starting point.

All lenders have a 'lending policy' - they choose to lend on different constructions - if you tell them what the build name is, you will find out very quickly without cost whether they will potentially lend on the property.

The scheme Richard refers to is the PRC Repair Scheme, some lenders will only lend on some pre-fabricated steel framed properties if they have been made mortgageable by amendments made under this registered scheme.

Many moons ago, private owners of these properties could obtain a grant for works to be carried out.

If this property has been re-clad by the local authority and its outward appearance is of standard construction, there is a chance that it hasn't been repaired.

I have been speaking to a local authority recently on a similar basis - they didn't get the work done, as the priority for the Council was simply making it habitable for the tenant, and not necessarily mortgageable.


Best of luck!

Richard_Webster

I don't know the last poster but it is his level of knowledge and understanding about no-trad houses that you need in a financial adviser. From what he has said it is obvious he knows a lot more than average about this kind of thing. You might even want to pm him!

Swift1_3

If you have a big deposit and the funds to upgrade the house (if possible) then you could consider it if the price is amazingly low. Otherwise don't waste time on it.
You will be restricted to a few lenders who will more than likely want a big deposit AND a large fee AND a higher interest rate.
When you want to sell again any potential buyers will either be put off by the construction or unable to borrow against it.
In a housing market downturn any property thats seen as undesirable could easily suffer most if buyers can afford to be picky.

Snooze

Yeah, all the info about the PRC houses is nice and everything but it seems that some of you need to open your eyes and read reply 5 ......

Rob

clearing_out_my_pockets

I work in construction (on residential, as it happens) and when we build houses / flats, etc we do not use steel as the sound insulation isn't great. You say the house is constructed from metal & wood - what facade does it have? Is it brick or stone?