Mortgages For Steel Framed Homes

Anything from a thatched country cottage to a steel-framed house falls under the category of “non-standard” properties in the UK.

As per the official definition, a non-standard property is a structure not made of conventional construction materials like bricks, mortar, or stone. Such properties also lack a traditional tiled or slated roof.

So, it is no surprise that most lenders are concerned about the resale value and insurance of such properties and, hence, steer clear of financing them. However, getting a mortgage is still not impossible, though it will entail higher interest rates and stricter rules. 

To help you understand better, we have curated this informational guide to mortgages for steel framed homes, detailing the application process, eligibility, and more. So, read on and find out if this mortgage type is worth it or not.

Can You Get Mortgages For Steel-framed Homes?

As mentioned before, obtaining a mortgage on a steel-framed property is possible. But your eligibility for a mortgage will depend upon the specific type of steel-framed house you are aiming for. 

Lenders may decline mortgage applications for such properties due to concerns related to resale value and insurance. 

But there are also flexible lenders who are willing to provide mortgages for steel-framed properties in most cases, including both bungalows and standard house builds.

The reason why getting mortgages for steel-framed homes can be difficult is that they are often considered high-risk. Hence, nowadays, wooden frames are more commonly used than steel. 

But, many steel-framed homes were constructed after World War II to accommodate war-displaced individuals. 

These houses were not designed for long-term durability, making some lenders hesitant to offer mortgages for them.

Potential issues with steel-framed properties may include high energy costs and inadequate insulation, besides the structural concerns. 

Common Types Of Steel-framed Properties In The UK

The prevalent variety of steel-framed property is the BISF type. 

A BISF (British Iron and Steel Federation) construction house is a non-standard construction that gained popularity in the mid-20th century, particularly after World War II. 

BISF houses were specifically designed to be cost-effective and quickly constructed, addressing the urgent housing needs in the post-war period. 

Secondly, an Airey property, alternatively known as an Airey house or Airey prefabricated house, is another form of steel-framed property popular in the UK. These were mostly constructed during the 20th century. 

Similar to BISF houses, Airey houses also incorporated steel frames for structural support, with their exteriors typically clad in concrete panels.

Which Lenders Provide Mortgages for Steel Framed Homes?

1. Halifax

Halifax bases its decision on the valuer’s report and accompanying comments. Non-standard construction properties are individually assessed for merit. 

2. Coventry Building Society

Consideration is limited to properties built on or after January 1, 1990, when it comes to this financing company. Mainly, it insists that a minimum of 67% of the property’s cladding must be either brick or stone. 

Certain construction materials, such as large concrete panels, tiles, metal sheeting, plastic, and timber, are excluded in many cases.

3. Norton Home Loans

A full property valuation is a prerequisite for Norton Home Loans to evaluate an application. If the surveyor deems the property unsuitable for conventional mortgage lending, the Loan to Value (LTV) is capped at a maximum of 50%. 

4. The Mortgage Lender

This lender exclusively approves mortgages for those purchasing modern, purpose-built flats. They mandate a 3-year address history and factor in student loans when assessing applicants’ affordability. 

As demonstrated by the aforementioned examples, securing a mortgage for a steel-framed home can be intricate. Hence, we recommend collaborating with a specialist mortgage broker to navigate through this segment of the market.

Lending Criteria for Steel Framed Homes Mortgages

Lending criteria can vary significantly between different lenders. Certain lenders may require a comprehensive survey conducted by a structural engineer or building surveyor.

If the property valuation indicates potential challenges in terms of future mortgage approval, insurance, or resale, lenders may either reject the application or restrict the loan amount. 

For instance, some lenders may only offer a 50% Loan to Value (LTV). This means that if the property is valued at £200,000, they will lend only £100,000, requiring the borrower to provide a 50% deposit.

The age of the property is another factor considered by lenders. Some may accept properties constructed after the 1960s, while others have even more stringent criteria, insisting on properties built after the year 2000.

How To Improve Your Chances Of Mortgage Approval for A Steel-Framed Property

1. Consult A Mortgage Broker

As previously stated, engaging a mortgage broker streamlines the home-buying process and strengthens your chances of obtaining the required loan. 

Well-versed in the property market, a broker can compare multiple lenders and mortgage options, identifying the most suitable one for your needs.

Additionally, they possess insights into lenders who may be less inclined to approve your application based on personal circumstances. 

Accordingly, they will help you avoid such lenders and chances of rejection, thereby safeguarding your credit score. 

2. Enhance Your Credit Rating

Improving your credit score before applying for a mortgage can simplify the loan approval process. Although enhancing credit is a gradual process, several measures can expedite it.

For instance, you can refrain from unnecessary credit applications, settle any manageable debts, register on the electoral roll, check credit reports from major agencies for inaccuracies, etc. 

That said, a bad credit mortgage may still be an option for those with a poor credit record. 

3. Save A Larger Deposit

While saving a large amount of deposit may be challenging, it significantly enhances your likelihood of securing a mortgage for a steel-framed property. Most residential mortgage lenders typically require a minimum deposit of 10%. 

However, for a steel-framed home, a larger deposit may be necessary. A bigger deposit not only aligns with a lender’s preference but also mitigates their risk, offering protection in case of payment issues.

Potential Costs Of Applying For Mortgage On A Steel-Framed Home

1. Maintenance Costs

The ongoing costs associated with maintaining a non-standard construction property are likely to be higher than traditional houses. 

And in case of steel-framed houses, the risk of corrosion exists if proper maintenance is neglected. 

So, future homeowners should be mindful of the potential for increased maintenance expenses over the long term. 

2. Survey Expenses

Acquiring a non-standard construction property incurs higher costs compared to standard construction properties, primarily due to the survey mandated by the lender. 

Lenders often require a specialist survey conducted by a qualified engineer or surveyor with expertise in steel-framed properties. 

So, before finalising a purchase, we recommend enquiring about the requirement of such a survey.

3. Long-Term Budgeting

In budgeting for your new home, it is crucial to factor in not only the initial purchase price but also the anticipated costs of regular maintenance and potential repairs. 

This approach ensures a comprehensive understanding of the financial commitment associated with owning a non-standard property. 

4. Insurance Considerations

Home insurance for steel-framed properties may prove more expensive than for traditional properties. 

So, it’s essential to anticipate higher insurance premiums and factor this into your budgetary considerations.

What Can Affect A Lender’s Decision On Steel-Framed Home Mortgages?

When seeking a mortgage for a steel-framed house in the UK, the primary concern for mortgage lenders revolves around the property’s condition. 

Specific issues with BISF houses often stem from inadequate maintenance rather than flaws in production or design. 

It is crucial to ensure proper maintenance of the lower part of a BISF house, promptly repairing any cracked or damaged render to prevent water logging. 

Detection of such issues may indicate potential corrosion, which could result in mortgage lenders rejecting the application. 

Lastly, meeting the lender’s unique criteria is also imperative. 

Generally, lenders offering this type of mortgage cater to a diverse clientele, including first-time buyers, self-employed individuals, or those with a bad credit history. As such, various lenders may be available to accommodate your specific circumstances.

Conclusion 

Clearly, securing a mortgage for steel-framed homes involves unique challenges, ranging from stringent lender criteria to higher interests. 

Hence, identifying the type of property you’re interested in and thoroughly understanding individual lender requirements are essential.

While the process may be intricate, specialised mortgage brokers can significantly help prospective homeowners find suitable financing options and fulfil their dreams of homeownership!

Your home may be repossessed if you do not keep up repayments on your mortgage.

All content is written by qualified mortgage advisors to provide current, reliable and accurate mortgage information. The information on this website is not specific for each individual reader and therefore does not constitute financial advice.