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Timber-Framed Mortgages

Looking for a mortgage to fund the purchase of your timber-framed house? Let’s explore how this mortgage type works and the difficulties you may face during the application process.
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A significant portion of the UK houses being made in the modern age have begun to move away from the traditional brick-and-mortar construction.

As an effective alternative, timber frames have begun to take the housing market by storm.

Statistics indicate that as of 2018, timber frame homes occupy a massive 28.4% market share, which continues to grow day by day.

So, when purchasing such a property, it’s essential to know if there are mortgages that cater specifically for timber-framed houses. 

And owing to its huge market share, timber-framed mortgages are becoming a common sight in the mortgaging market, offering unique perks for borrowers to enjoy.

Is It Possible To Get Timber-Framed Mortgages?

Timber-framed constructions

Timber-framed constructions are classified as non-standard construction, and mortgages for them fall under the non-standard construction mortgage category.

The term “non-standard construction mortgage” encompasses a wide variety of mortgages for buildings that utilise construction materials other than brick and mortar. 

This is a relatively smaller section of the market, making it difficult to find lenders who are willing to provide a mortgage for such property types.

Being a subsection of a smaller market, finding mortgages for timber-framed homes is certainly difficult but not impossible. 

Note that you may have to go through a few extra steps during the application process, like a property more detailed survey for the lender rather than their standard mortgage valuation .

Why Timber-Framed Mortgages Are Difficult To Get?

Mortgages for Non-standard construction properties can be difficult to find as is the case with timber-framed properties.

The reason behind these mortgages being relatively more difficult to find is that lenders view non-standard construction to be high risk. 

Since they can’t determine the integrity of the structure without a property survey, the associated expenses and risks make lenders apprehensive towards timber-framed buildings.

This results in stricter restrictions and higher payments in the form of larger deposits, higher interest rates, or a combination of both. 

You may also be subject to a strict affordability check, requiring a credit history that is virtually spotless for approval as there is a reduced pool of lenders who lend on properties of timber framed construction.

The lender may also ask you to handle the expenses incurred when the property survey is conducted, along with the planning of the survey itself. 

Of course, this becomes expensive rather quickly, keeping the other steps of the mortgaging process and higher payments in mind alongside this.

That said, even after going through the affordability checks successfully and having a virtually spotless credit history, there is no guarantee that you will get the loan. 

If the property surveyor reports issues with the structural integrity of the house, you may still be rejected for the loan.

So, when approaching lenders for a timber-framed mortgage, consulting an experienced broker is in your best interest. 

Importantly, structural surveys may be required which are a cost on the applicants with no guarantees of a successful offer. 

Issues To Keep In Mind

1. Structural Issues

Timber frames are known to be susceptible to decay and dampness, which can harm the structural integrity of the house. 

This is a point of concern, particularly for areas where the humidity level is usually quite high, making maintenance an ordeal.

This makes lenders averse to the idea of lending money to a borrower for a timber-framed house. 

After all, if the house collapses or faces severe damage before the borrower pays the mortgage back, the lender will likely face a massive loss. 

2. A Lack Of Resale Potential

Wood tends to decay, and after a few years, the decay becomes severe enough that the house must be rebuilt from the ground up.

A lender cannot recoup losses by selling a house that is already on its last legs, contributing to the apprehensiveness for timber-framed mortgages. 

Moreover, lenders are typically averse to the idea of pouring money into house repairs without being certain of its sale.

This further worsens the scarcity of timber-framed mortgages, making it quite difficult to find lenders willing to offer a loan at standard rates.

3. Insurance Problems

Getting your timber-framed house insured is quite challenging, and mortgage lenders are well aware of that. 

Insurers typically offer terms that are less than ideal to account for the presumed lack of longevity that comes with a timber-framed house.

And with the lack of insurance, mortgage lenders become more apprehensive about the prospect of offering a deal, let alone a favourable one. 

Lenders typically require the property to be eligible for insurance to safeguard the applicant’s mortgage repayment and avoid losing money.

Specialist insurers do offer insurance for timber-framed homes, but like with mortgages, those who offer a suitable deal can be difficult to find.

Eligibility Criteria for Timber-Framed Mortgages

Mortgage Eligibility Criteria

Timber-framed mortgages have several eligibility criteria, many of which largely depend on your chosen lender. 

That said, there are three requirements that you are expected to meet by nearly all of them, as detailed below.

1. Affordability

Like with any mortgage, a lender always tries to ascertain that you will be able to repay the loan amount without any difficulties. 

For this, they may require documentation from you to parse through and determine your income status. 

If you are a salaried person, you may be required to present pay slips from the previous two years (although normally less than this period). . 

Alongside this the lender will typically request bank statements to see whether your income is stable or not.

The lender will offer a deal based on the income you make per year, which will play an instrumental role in your decision to accept.

2. Deposit

Generally, timber-framed mortgages don’t have a minimum deposit requirement. That said, it may be difficult to find a lender who requires anything less than a 10% deposit. In contrast, standard mortgages are available for as little as 5% or even 0% deposit in certain niche scenarios.

Realistically, you should expect a value of around 25% for a 75% Loan-To-Value ratio, as timber-framed buildings are considered to be non-standard construction. 

This can fluctuate heavily based on the property value, loan term, and affordability, going as high as 40% in some cases.

3. Credit File

Your credit report is a reflection of your diligence when it comes to repaying debts and bills. If you pay bills and debts in a timely manner, it will reflect positively on your credit score. 

Of course, the opposite is also true, and a low credit score can make your mortgage prospects quite unlikely.

Lenders prefer applicants to have a spotless credit file, which is a way of assuring that the mortgage will be repaid in time. Applicants with a low credit score are often rejected swiftly as they are considered to be high-risk borrowers.

So, be sure to check your credit score before applying for a mortgage. If your credit score is exceedingly low, consider raising it to the “good” range (700-749) or approach a lender who provides bad credit loans

It’s usually better to resort to the former if you are a first-time buyer with bad credit.

An experienced mortgage advisor will help you with the above factors. 

Mortgages For Timber-Framed Extensions

If you need funds to build a timber-framed extension instead of a complete house, you might be able to rely on timber-framed mortgages to cover the expenses through a re mortgage of the property..

The first step to getting your mortgage is to find a specialist mortgage lender who approves of your preferred extension plans. They will likely ask you of your plans as part of the mortgage application when you file that later. 

After that, check your credit score, see if you meet the eligibility criteria, assess your affordability and file an application with the lender.

Since extensions are less labour-intensive and time-saving than a renovation or a complete construction, approvals are usually easy to come by, but of course this is lender dependent. If a large amount of capital is raised lenders may be more likely to see if planning consents are required and attained for your proposed plans. 

FAQ

1. Is it possible to get a timber-framed mortgage with a low credit score?

Finding a timber-framed mortgage with a low credit score is possible, but it can be quite challenging. You must find a broker who specialises in bad credit mortgages and will connect you to lenders willing to offer a deal.

2. Is insurance more expensive for timber frame houses?

As far as the insurance costs for timber-framed houses are concerned, they are typically similar to a standard house. But, finding a company willing to insure a non-standard property can be quite difficult.

Final Thoughts

Timber-framed mortgages are some of the simpler types of non-standard construction mortgages, thanks to the continuously increasing usage of wood in modern homes.

Of course, compared to a standard mortgage, it is still rather difficult. There are plenty of restrictions and eligibility criteria to be mindful of before applying for a mortgage for your new timber-framed home.

Even so, finding a deal that suits you can be made easy with a little luck and the help of a professional broker.

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.

CeMAP & CERER Qualified Mortgage Adviser

I am CeMAP & CERER qualified mortgage adviser and have helped a number of clients realise their dreams when they thought it would not be possible. I’m skilled at getting mortgages sorted for people with a history of missed payments, CCJs, defaults, debt management programmes, IVAs and bankruptcies.

Mortgage & Protection Advisor | 03337892035

I am CeMAP (Certificate in Mortgage Advice and Practice) qualified mortgage adviser with a strong background in Finance. I specialise in providing expert advice on a range of mortgage products, including first-time buyers, remortgages, buy-to-let mortgages and bad credit mortgages.

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