Non Standard Construction & Bad Credit Mortgages

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The aim for this post is to give you a brief overview of what is classed as non standard construction and how you may be able to purchase a non standard construction property with bad credit.

What is non standard construction?

Simply put, non standard is a property made from anything other than Brick or Stone walls with a Tiled or Slate roof. So that could be Wood or Steel framed buildings, homes made from concrete, No fines or something more modern such as modular homes as we starting to see from companies coming through.

What is Bad Credit?

There is no formal definition of bad credit, it could be a lot of arrears, a couple of defaults or CCJs or maybe just one or 2 defaults/CCJs which were registered recently. For the purposes of this post, I will work on the assumption that we are talking about multiple defaults dated within the last 3-4 years or discharged from bankruptcy within the last 5 years.

Can I obtain a Mortgage with Bad Credit on a non Standard construction property?

The market for Mortgages on no standard construction properties is generally quite restricted.

There tends to be 2 types of Mortgage lenders who lend on properties built from non standard construction methods.

  1. Mainstream lenders. Typically these are your high street lenders who are happy to take a risk on some non standard construction methods on the basis that you as an applicant are a good risk to the lender. The downside here however is that in terms of Bad Credit, they may look to accept the off minor and/or historic blip but they are unlikely to accept recent or multiple defaults/CCJs or arrears etc.
  2. Adverse lenders. By Adverse lenders, I am not talking about the specialist lenders who fit in the middle and have relatively good rates and will accept some defaults, I mean the real adverse lenders. They tend to base their lending decisions on whether or not you fit criteria and is there enough equity in the property should you not pay. The downside to these lenders however is that their rates tend to start at around 6% and go upwards.

The part of the market that we tend to deal with most is the more specialist market. Specialist it the new term for sub prime and that part of the market will typically look to accept Defaults and CCJs over 12 months or Bankruptcies which have been discharged over 3 years (rather than the 1 year with the adverse lenders or 6 years with the main stream).

That part of the market is quite happy to accept Bad Credit all day long, but they are very reluctant to accept properties than do not fall into the category of “standard construction”.

As you can probably see, this means we are typically looking at the 2 polar opposites in terms of lenders, there is not much in the middle. That can mean you typically need a large deposit and potentially expect to pay higher rates.

This can leave you in a bit of a dilemma as most people who take out a real Adverse Mortgage tend to only do so for maybe 12 months until their issues are old enough to look at a specialist lender, but with a non standard construction property you are unlikely to have many options to obtain a better rate for maybe 3-4 years (if not longer).

How can Mortgage Success help?

As mentioned above, your options are limited and if you do decide to go down the Adverse lender route with a plan to remortgage as soon as possible, there are still potential options out there.

One possible route, could be to look at the local building societies. If the build type is normal for the area, you may find the local building societies are happy to lend on the property – but you then need to see if they will accept you as an applicant.

Another can be that we try to get you through with the normal lenders. Having adverse does not necessarily prevent you from getting a “normal” mortgage, around a third of our customers with bad credit end up getting a normal mortgage, the devil is in the detail when it comes to this but being realistic the adverse needs to ideally be limited and not recent.

We also have lenders who will take a manual approach and if you fit criteria or are borderline, there is plenty of equity in the property and the rest of the case is a positive one, we could pick up the phone to the underwriters to these lenders and discuss it with them.

There is a lot of work in these types of applications and it may seem like things are moving slowly initially but the reason for that is to ensure that when then full application goes in, we have done our best to check everything upfront and give it the best possible chance of being accepted.

Get in touch and lets have a chat and see what we can do.