Getting a modular home mortgage

Modular Home Mortgages are similar to the non -traditional types of mortgages in the UK. In this article, we will critically review the mortgage process for modular homes.

Modular homes are built using Modern Methods of Construction (MMC). This umbrella term is used to describe many different types of non-traditional, non-standard construction – some of which are by no means all that new or modern.

What is more – and especially relevant to the eager homebuyer – is that an MMC mortgage can prove more than usually difficult to secure.


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What are modular homes?

Just as the term suggests, modular homes are different to traditional homes.

The latter are built using brick and blockwork cavity or stone walls, topped with a slate or tiled roof. Then, using those standard construction materials, the house is constructed onsite, employing various individuals skilled in their own trades.

A modular home is assembled from components manufactured in a factory offsite. The modules made in the modular housing factory are transported to the building site, where they can be assembled quickly and relatively easily by individuals without the building trades skills required to build a standard construction house.

Modular homes erected in this way use what is known in the building industry as Modern Methods of Construction (MMC).

The term MMC might be something of a misnomer, though, since these housebuilding techniques were first adopted in the aftermath of the Second World War when there was a dire need to meet a serious housing shortage – and the iconic “prefab” was born. The prefab – built as homes for those whose houses had been bombed during the Blitz – was the first of its kind to be assembled onsite from prefabricated panels manufactured elsewhere.

Since the first appearance of such prefabs, however, modular construction techniques have been improved, and they are now also known as MMC houses, pre-manufactured modular buildings, and volumetric buildings. Not only houses but also blocks of apartments and flats are built using MMC techniques.

Indeed, modular construction methods are now employed across the entire range of building projects, including commercial developments such as hospitals, hotels, and office blocks.

 

Are prefab homes modular homes?

As we’ve seen, prefabs are among the first types of modular homes to be built in the UK.

A recent news story  describes the affection with which some residents continue to feel towards the buildings that were referred to at the time as “tin can homes”. Although they were initially intended only for the temporary use of 10 years or so, of the estimated 156,000 built after the War, some 8,000 still remain – more than 70 years on.

The resurgence of official and commercial interest in modular construction – Modern Methods of Construction (MC) – is driven by what developers LHC identify as four principal advantages, especially in the provision of affordable social housing:

  • the speed with which such homes can be built;
  • improved sustainability stemming from the reduced waste during factory manufacturing processes;
  • reduced cost; and
  • increased competition in the housing market.

While the chief beneficiaries may be social housing tenants, MMC homes may also be attractive to younger buyers looking for an affordable home that will be their first step on the housing ladder.

 

Can I get a mortgage on a modular home?

Modular, MMC, or prefabricated homes continue to be regarded by mortgage lenders as non-standard construction. Because of their non-standard construction, you might encounter more difficulties than usual and a more restricted choice of potential lenders when applying for a mortgage.

Provided you are prepared to search the available pool of lenders more carefully – with the aid of an experienced mortgage broker – you may still be able to secure a mortgage on the prefab house you want to buy.

What is a non-standard construction mortgage?

As we have seen, mortgages for homes of unusual construction give some lenders greater than usual difficulty. Their preference is for the standard structure of a house built from brick and blockwork cavity walls and a tile or slate roof. However, MMC methods are a notable departure from that traditional approach – modular homes are “non-standard”.

To that extent, there remains a relatively long list of dwellings that mortgage lenders will regard as non-standard construction, including:

  • homes with thatched roofs – unless the roof is tiled or hung with slate, it is non-standard construction;
  • homes built around steel or timber frames;
  • houses built with just a single course of brickwork – only cavity wall construction provides the degree of insulation required in modern homes;
  • homes built using prefabricated concrete panels;
  • flats in high-rise blocks;
  • listed buildings – including buildings of historic or architectural interest; and
  • many others.

 

What type of mortgage do I need if I’m building a prefab house?

With the help of an experienced mortgage broker, you can find lenders who specialise in granting loans for the purchase or construction of modular homes.

Of course, you might have chosen an existing house erected using prefabricated construction techniques. But you might also want to join the steadily swelling ranks of those who see MMC as a way of owning their own affordable, self-built home. These come in various “flat-pack”, self-build, or kit forms, as described in a review of 20 such packages by Homebuilding & Renovating.

 

Next steps

MMC building techniques have opened the way for all modular forms of housing – and may even have refreshed a fondness for some of the earliest prefabs still standing.

Although you can certainly get a mortgage on a modular house, your search for a willing lender may benefit from the advice and guidance we can offer at NeedingAdvice.co.uk – both in identifying the most likely mortgage lenders and our help in completing the formal mortgage application process.

FAQs –

How Do You Get a Mortgage for a Prefab House?

Homes built with prefabricated components in the UK are usually connected with prefabricated homes that were built after the Second World War to provide temporary homes. While they were meant to be temporary structures, they were extensively used over the years, and some of the original prefab homes still exist.

However, prefabricated homes in 2019 refer more to specialist buildings designed and made by manufacturers off-site in advance, often in sections which can be easily shipped and assembled.

This type of prefabricated house has become quite popular in recent years as it is also an affordable way to buy your first property and start on the property ladder.

You must contact a specialist mortgage broker to get a mortgage on a prefab house.

What type of mortgage do I need if I’m building a prefab house?

If you’re planning to build your own prefabricated home, you might need a self-build loan. When you’re building your home, the lender will need to release money in stages and examine the construction regularly.

The most effective way to get a prefab mortgage is to locate mortgage lenders that lend to people who need prefabricated houses.

But, it is essential to consult a professional before creating a house using non-standard materials as it will affect its worth and ability to sell.

How to find prefab mortgage lenders?

Getting a mortgage lender for prefabricated houses is not very common in all areas of the UK. There are minimal high street lenders who can provide you mortgages on such prefabricated houses, so it is always better to contact a mortgage broker before starting your mortgage application process.