Steel frame houses are becoming an increasingly popular choice for modern homeowners. Known for their durability, sustainability, and resistance to pests, these homes are an attractive option for many. However, when securing a mortgage for a steel frame house, things can get a little tricky.
If you plan to buy or refinance a steel frame home, keep reading to learn how to overcome potential hurdles and secure the financing you need.
| Consideration | Description |
|---|---|
| Construction Type | Non-standard, requiring specialist mortgage |
| Survey and Valuation | Comprehensive survey required to assess property condition |
| Deposit Requirements | Typically higher, often 20-50% of property value |
| Loan-to-Value (LTV) Ratio | Often lower, e.g., 50% to manage risk |
| Creditworthiness | Important for securing favorable mortgage terms |
| Insurance | Ability to insure the property without high costs is crucial |
| Resale Value | Lenders assess potential resale value to ensure investment security |
What Are Steel Frame Houses?
Steel frame houses are exactly what they sound like—homes built with a structural framework made from steel. Unlike traditional houses that use timber or concrete, these homes rely on steel for their structural integrity.
A Brief History of Steel Frame Houses
Steel frame construction gained popularity after World War II, particularly in the UK and the US. Governments sought fast, cost-effective ways to rebuild housing, and steel offered a lightweight yet strong construction material.
Today, steel frame houses are associated with modern, eco-friendly designs. They’re particularly favored in areas prone to natural disasters like hurricanes or earthquakes.
Advantages of Steel Frame Construction
Steel frame houses come with several benefits, such as:
- Durability: Steel is resistant to rot, pests, and fire, making it more durable than timber.
- Eco-Friendliness: Steel is recyclable, making it a sustainable choice for environmentally conscious buyers.
- Structural Strength: Steel can withstand more weight and stress, offering better resistance to extreme weather conditions.
Disadvantages of Steel Frame Houses
However, steel frame construction isn’t without its downsides:
- Thermal Conductivity: Steel conducts heat and cold more easily, affecting energy efficiency if improperly insulated.
- Corrosion Risk: Steel may corrode over time in areas with high humidity or salt exposure.
- Non-Standard Classification: Many lenders consider steel frame houses to fall under “non-standard construction,” which can complicate financing.
Common Misconceptions
A common myth about steel frame houses is that they’re harder to maintain. Proper construction and care can last just as long as traditional homes.
Why Are Steel Frame Houses Hard to Finance?
Securing a steel frame house mortgage can be more challenging than a conventional property. Let’s explore why.
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Lenders’ Concerns About Structural Integrity
Steel frame houses are often perceived as less stable than brick or timber homes. While this isn’t entirely true, lenders worry about potential risks like:
- Corrosion or weakening of the steel framework.
- Subpar construction techniques are used in older steel-frame homes.
Resale Value and Marketability
Because steel frame houses are considered non-standard construction, they may not appeal to all buyers. This can lower resale value, making lenders hesitant to offer mortgages.
Insurance and Valuation Issues
Another challenge is insurance. Insurers often charge higher premiums for steel frame houses due to perceived risks, which can impact valuation and, in turn, your mortgage approval.
Higher Risk Perception
Anything deviating from the norm is considered a risk in the financial world. Steel frame houses, being non-standard, fall into this category, which explains the additional scrutiny from lenders.
How to Get a Mortgage for a Steel Frame House
Getting a steel frame house mortgage is possible—you must meet specific requirements and go through the proper channels.
Comprehensive Surveys and Valuations
A thorough structural survey is essential. Lenders often require a detailed report to ensure the property is in good condition. This report will address concerns like:
- The structural integrity of the steel frame.
- Potential corrosion or damage risks.
Specialist Mortgage Brokers
Working with a specialist mortgage broker can make all the difference. These professionals have experience with non-standard construction properties and can connect you with lenders more likely to approve your application.
Mortgage Application Process
The process itself is similar to applying for a traditional mortgage but with added steps:
- Submit your application.
- Provide the lender with the structural survey report.
- Wait for the lender’s valuation.
Specialist brokers can guide you through this process and help address lender concerns.
Lender Criteria and Deposit Requirements
Different lenders have different criteria when it comes to steel frame houses. Here’s what you should know.
Lender Criteria for Steel Frame Houses
Some lenders impose stricter conditions, such as:
- Only financing specific types of steel frame construction (e.g., those built after a particular year).
- Proof of regular maintenance is required to ensure the property’s condition.
Typical Deposit Requirements
For steel frame houses, deposits are often higher than for standard homes. Expect to pay 20-25% of the property’s value as a down payment. This reflects the perceived risk associated with non-standard construction.
Examples of Lenders
Some lenders, like Coventry Building Society, offer specific products for steel frame houses. However, they may have restrictions, such as requiring a higher deposit or additional documentation.
Real-Life Examples of Financing Steel Frame Houses
Let’s look at real-life examples to understand how buyers have successfully secured financing for steel frame properties.
Case Study 1: First-Time Homebuyer
A young couple in the UK wanted to purchase a steel frame house built in the 1970s. They worked with a specialist broker who helped them find a lender to finance the property. They secured their mortgage by providing a detailed structural survey and agreeing to a 25% deposit.
Case Study 2: Refinancing an Older Property
A 1950s steel frame house owner wanted to refinance to fund renovations. After an initial rejection from a high-street lender, they approached a specialist lender through their broker. By demonstrating the property’s good condition, they successfully refinanced it.
Tips for Buying a Steel Frame House
If you’re considering a steel frame home, the following tips will help you prepare.
Prepare for the Mortgage Application Process
Start by gathering all necessary documents, including:
- Proof of income.
- Structural survey reports.
- Maintenance records for the property.
Address Lender Concerns
Understand the specific concerns lenders may have and proactively address them. For example, if the property has minor corrosion issues, consider repairing them before applying for a mortgage.
Work With a Specialist Broker
A specialist broker can save you time and effort by connecting you with lenders more likely to approve your application.
Budget for a Larger Deposit
Be prepared to pay a higher deposit. This increases your chances of approval and reduces your monthly payments.
Conclusion
Financing a steel frame house may seem daunting initially, but it’s achievable with the proper preparation and guidance. The key is understanding these properties’ unique challenges and working with specialists who can navigate the complexities of non-standard construction mortgages.
Whether you’re a first-time buyer or looking to refinance, the most important thing is to stay informed and proactive. By following the tips outlined in this guide, you’ll be well on your way to securing the mortgage for the steel frame house of your dreams.
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