Mortgages for unusual homes
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It may not be easy to get a mortgage for an unusual property, but as more weird and wonderful homes appear on the market, mortgage lenders will try their best to accommodate you.
Fancy living in a boat moored on the Thames, in a semi-converted lighthouse or in the penthouse of a tall apartment block? Then start talking to lenders sooner rather than later, say experts, because the more unusual the property, the harder it could be to finance it.
But buying something just a little out of the ordinary can be easier than you think. Old mills, tithe barns, old oast houses, converted fire stations – all are projects the Halifax has provided mortgages for, says spokesman Paul Fincham.
“ If you’re looking for something unusual, you should approach your lender in the usual way and get an agreement in place,” says Fincham. “From a lender’s perspective, we look very carefully at the valuer’s report and at issues like resaleability.” Lenders will also look at the quality of a conversion, he warns – or if you plan to convert it yourself, will consider releasing money in stages.
“ But check that you’re not looking at the place through rose-tinted spectacles,” Fincham adds. “An unusual property could need an unusual level of care: old schoolhouses, for instance, might have huge windows, or old churches could have valuable glass that needs maintaining.”
Some lenders are quite literally afraid of heights, warns Melanie Bien, associate director of Savills Private Finance. “Some lenders won’t look at the top floors of high-rise properties, for instance,” she says. “For lenders, risk is the main thing. So lenders will look very closely at a valuer’s report.
“ For a listed building or something very unusual, you might need a specialist survey carried out by somebody who really understands that type of property. And some very unusual buildings are in a poor state of repair. So lenders might release the money in stages, and get someone to check before they release any more,” says Bien.
The value of advice
Lenders are understandably put off by the prospect of borrowers simply sailing off in their newly acquired prop-erty – and to finance homes in converted railway carriages, say, lenders generally want them to have been immobilised, says Bien.
Many property owners use self-build to convert the property they want, and employ a team of builders, which means never getting their hands dirty. “There is typically a 25-35 per cent increase in equity if you do it yourself,” says John Hay, spokesman for Buildstore. “So a lot of people use self-build as a way of leapfrogging one or two stages up the housing ladder.”
How does it work? Buildstore works with five mainstream lenders to offer a mortgage where payments are made in stages, and in advance – when you need to do the work – instead of in arrears, as most lenders would offer. “Self-build mortgages have developed a lot in the last five years,” says Hay, “and so there’s no need to live in a caravan in the meantime. Customers can now stay in their own homes while the work is done.”
You can now borrow up to 95 per cent of the cost of the property through the Buildstore deal, adds Hay, and can borrow on land with outline planning permission or on an unusual property you want to renovate.
To create an environmentally friendly home, many borrowers are now looking to the Ecology Building Society. “For many mainstream lenders, this is unfamiliar territory because they don’t know what photovoltaic panels or composting toilets are,” says marketing manager Jenny Barton. “But people building green properties typically want a green lender as well.”
Financing an unusual home is becoming easier all the time, and your home can stand out and help save the planet too.
ARTICLE TAKEN FROM ‘WHAT MORTGAGE’ MAGAZINE - February 2006