Secured loans on non-standard construction property

How lenders typically treat it

A general guide to how the market behaves, not a promise about any lender. Criteria change and every case is assessed individually. See the lender criteria database for named lenders.

What counts as non-standard construction to a secured loan lender?

Anything that is not brick or block cavity walls under a pitched roof of tile or slate. That definition sweeps in a wide range of homes: timber frame houses built from the 1970s onwards, steel-framed houses from the 1940s and 1950s, precast and poured concrete homes from the post-war building programme, system-built tower blocks, thatched cottages, and period homes with cob, stone or flint walls.

Lenders care for three reasons. The first is resale: a home that fewer buyers can get a mortgage on is harder to sell if the lender ever has to take possession. The second is durability: certain concrete systems corrode from the inside and timber frames can suffer if the cavity was badly built. The third is insurance: thatched and some timber homes need specialist cover, and a lender wants to know it is in place.

Because the risks differ so much by type, most secured loan lenders keep a construction list rather than a single rule. One column is considered on standard terms with a full valuation, one is considered subject to a structural engineer's report, and one is declined. The same house can sit in different columns at different lenders, which is why the first job on a non-standard case is finding out exactly what the home is built from. Your deeds, a previous mortgage valuation, the original council records or a local surveyor will usually tell you. Our ex-council property page overlaps here, since many concrete and steel homes were built by local authorities.

Which construction types are considered with a full valuation, and which need a structural report?

The dividing line is whether the risks are visible to a valuer or hidden inside the structure. A full valuation, where a surveyor visits and inspects, is enough where the valuer can see the condition of the walls, roof and cladding and confirm the type. A structural engineer's report goes further, opening up or testing the structure, and is asked for where the known problems cannot be seen from the surface.

• Full valuation usually enough: modern timber frame with a brick skin, BISF steel frame in good order, poured concrete such as Wimpey No-Fines and Laing Easiform, stone, flint and cob walls, and thatch with a recent roof and specialist insurance.
• Structural report often required: less common steel systems, timber frame with external timber cladding or built before the 1970s, large panel system blocks, and any concrete home where the valuer cannot confirm the type or sees cracking, spalling or rust staining.
• Repair certificate required: PRC types designated defective, covered in the next section.

A structural report costs several hundred pounds and is paid by you, so it is worth asking the adviser which lenders would need one before commissioning it. Where a report already exists from a previous purchase or mortgage, some lenders will take it if it is recent enough, usually within a few years, and was prepared by a chartered engineer.

Timber frame is the most common non-standard type in modern housing. Lenders' concern is not the frame itself but fire spread between adjoining homes and moisture in the cavity. A post-1980s frame from a recognised manufacturer with a brick outer leaf is close to standard at many lenders; the valuer will still visit and note it.

What about PRC and other designated defective houses?

Precast reinforced concrete houses were built in large numbers after the Second World War, and by the early 1980s it was clear that the steel reinforcement in several systems was corroding and cracking the concrete. The Housing Defects Act 1984, later consolidated into Part XVI of the Housing Act 1985, designated the affected types, including Airey, Cornish Unit, Unity, Wates, Reema, Woolaway, Parkinson and others, and set up a scheme of grants and licensed repairs. Gov.uk and the legislation itself list the designated types in full.

An unrepaired designated house is unmortgageable at most lenders, and secured loan lenders follow the same line. A repaired one is a different proposition. Where the repair was carried out under a licensed scheme, the original concrete walls are replaced or encased in new brick or block, and a certificate is issued confirming the work. Many lenders will then consider the home close to a standard brick house, with a full valuation to confirm the repair is sound. The certificate is the key document, so find it before you apply; if it has been lost, the original repair company, the council or a structural engineer can sometimes reconstruct the position.

Two cautions. First, a repair done privately without a licence may not be recognised, and a lender may ask for an engineer to inspect and sign it off. Second, a semi-detached or terraced PRC house is usually only treated as repaired if the adjoining home has been repaired too, because the structures share walls. Some lenders will look at a partially repaired terrace at a lower loan to value; others will not.

Why do some lenders exclude non-standard construction entirely?

Mainly because of how they fund and run their business, not because every non-standard home is a poor risk. Many specialist second charge lenders package their loans and sell them on to investors or borrow against them from banks, and those funding lines often come with property criteria attached. A funder that wants only standard construction in the pool forces the lender to decline everything else.

The practical result is that the secured loan market splits. A group of lenders declines all non-standard construction; a larger group considers most types with a full valuation and holds a shorter exclusion list, usually unrepaired PRC, prefab and large panel system; and a few will look at almost anything with the right report. Because the lists are set by each lender and change with funding, a decline from one lender says little about the market as a whole. Our lender criteria pages record what each lender publishes and when we last checked.

It also means the rate you are offered may be higher than a brick house with the same credit profile would attract, because the lenders willing to consider it may not be the cheapest in the market. A broker's role is to find the best-priced lender that will consider your construction type rather than the best-priced lender overall. If nobody will, the honest answer may be that the home is not currently lendable, and free advice from MoneyHelper, StepChange or Citizens Advice becomes the next step for the debts themselves.

What would a secured loan on a non-standard construction home cost?

The rate depends on your credit history, the combined loan to value and which lenders are willing to consider the construction type. The fees are the standard set, with one addition: the full valuation, and any structural report, cost more than the desktop valuation used on a brick house. The example below uses the fixed illustrative rate applied across this site.

Monthly outgoings on the two debts fall from £532 to £190 in the example, while the total repaid over 15 years, £34,196, is well above the £20,000 borrowed because the term is longer than the original debts would have run. The loan is secured on your home, whatever it is built from, and if you do not keep up the payments your home may be repossessed. If the debts are unmanageable rather than simply expensive, speak to MoneyHelper, StepChange or Citizens Advice before securing anything on the property.

What improves your chances

• Find out exactly what your home is built from before you enquire, using the deeds, a past valuation, council records or a local surveyor.
• If the house is PRC, locate the repair certificate; if it is missing, ask the council or the repair company, or commission an engineer's report.
• Have buildings insurance in place that names the construction type, since a lender will want to see that cover exists.
• Where a structural report is likely to be needed, ask the adviser which lenders require one before paying for it.
• Keep the combined loan to value modest; a request at 60% to 65% is placeable with more lenders than one at 80%.
• Use a broker who places non-standard cases regularly, because each lender's construction list is different and changes over time.

Alternatives worth considering

If your mortgage deal has ended, a remortgage to pay off debt may be worth comparing, since some mainstream lenders lend on timber frame, BISF and repaired PRC at rates below the secured loan market. For smaller sums, a personal loan avoids the property question altogether; our secured loan versus personal loan comparison sets out where each fits. And if the debts are the problem rather than their cost, a debt management plan or an IVA through a free debt charity may be the more appropriate route; see our comparison with an IVA.