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Mortgage for Prefab Concrete House
You may have found your dream home or looking to invest in a buy to let but the property you have found is made of concrete. Properties with non-traditional construction can be more difficult to get a mortgage for and may cause complications when trying to insure the property or may when a home survey is carried out.
In this article we discuss this topic in further details and how you can get a mortgage for a prefabricated concrete house.
What is a prefabricated concrete house?
Non-traditional construction are homes which have walls that are made from any other material that is not brick or stone or has a roof that is not made from tile or slate.
Prefabricated homes were used in the UK to address the housing shortage crisis after the second world war. They are cheaper and faster to build than traditional construction but were only intended to last 10 years. Considering that prefabricated concrete houses still exist and have lasted more than 10 years, it shows that they can be durable but there are still some concerns with their construction which can make it more difficult to mortgage.
Why is it difficult to get a mortgage on a concrete house?
Lenders are cautious about lending on a property made of concrete construction because of their longevity.
Walls made from concrete structures can crumble over time and if the steel binding rods which hold the concrete together begin to corrode, it can lead to cracks forming and degrade the structure. Generally concrete houses should last minimum 50 years, and some have lasted more than 100 years but there has been instances where they have only last 20 to 30 years and this makes lenders wary.
It is difficult to judge how quickly it will deteriorate and improper maintenance can cause the property to lose value.
Lenders need to be sure that they have a good security for their loan because in the instance the borrower defaults on payments, they will need to be able to resell the property and recoup their losses. Concrete homes can pose more difficulties when it comes to selling.
It can also be expensive to insure if the underwriters are unsure with the actual risks of a property with non-traditional construction and some insurers may decline to insure on this type of property altogether because of the non-traditional nature of its structure, it can be very costly for insurers to pay out.
How to get a mortgage for a concrete house
As a prospective buyer with interest in a concrete home, it is a good idea to get a RICS home buyers survey and a building survey done on the property before committing to buy. This will help identify if and how much work is required on the property before you commit to a huge financial responsibility of purchasing the property and it can help you demonstrate to the lender that there are no visible damage or structural issues to the property. If a concrete house has had refurbishments carried out to ensure problems don’t arise from its concrete structure, lenders will be more willing to lend against it. If you can provide a PRC (Pre-cast Reinforced Concrete) Competition Certificate, this will show confirmation to a lender that a structural engineer has attended the property and confirmed that the structural work required to make the building secure has been carried out.
It is a good practice to try and find out all you can about the property so you can make a judgement before approaching a lender. Not all lenders will provide borrowing for concrete houses and lenders who are willing to lend will have strict guidelines on what they expect from the property before agreeing to lend.
Concrete homes can be appealing as they are generally cheaper than other similar properties in the same area that are built from traditional construction such as brick. You may be required to provide a bigger deposit on your mortgage for a concrete property than a traditional home to offset some of the lender’s risks. In some cases, lenders may choose to set a higher interest rate for lending on concrete homes.
If you are interested in buying a concrete house but require a mortgage loan, then the help of a mortgage broker could be useful by looking at lenders both on and off the high street, including specialist lenders to find you a lender who is more likely to provide mortgage loans for concrete houses.