Question
Is it possible to get a mortgage with a good interest rate on a property built entirely of wood? Our brokers told us this is not possible, but I want to get a second opinion.
Darren’s answer
In short, you can get a mortgage on a timber-built property, but it is more restrictive and depends on the type of timber construction.
Here’s a breakdown so you can understand the reality and your options.
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Wooden construction type
Lenders do not treat all timber properties the same. They tend to accept properties built with timber frame or timber construction with a brick or stone exterior. These types of construction are common in newer buildings.
Fully wooden properties such as log cabins or log exteriors are difficult to mortgage, while properties such as Swedish timber, chalet style, kit homes etc. are classified as “non-standard construction”, which lenders have limited appetite.
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When reviewing these construction types, lenders care about:
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- Fire hazard
- Durability and service life
- Resale value (hard to sell if restored)
- Maintenance requirements
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A mortgage for timber built properties may not be possible through a prime lender at standard rates because non-standard build properties may require a larger deposit and a specialist lender.
Generally, for non-standard timber construction, you look to building associations (more flexible underwriting) and specialist lenders.
- Some other factors that will affect the rating are:
- Surveyor’s report (this is crucial)
- Construction type (exact classification)
- Location and demand for resale
- Deposit size
- Your financial file
Your broker may have a limited range of lenders, which is why I recommend speaking to another broker who can review the specialist lending market and surveyor’s report to provide more informed results.
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