From boats to shipping containers; the alternative mortgage
The traditional way of buying your first house or moving house is to contact an estate agent, view some properties around an area of your choice, choose a house you like, research transport links and local schools, apply for a mortgage and then move in.
Is this the only way to do it?
Are there other alternatives for you to live in the house of your dreams?
It turns out; there are a range of different types of mortgages you can apply for:
• living in a brand new house
• buying a house to let it to tenants
• buying a place to live in somewhere a bit more exotic
• or even buying place to live that’s not a house at all.
Here at Financialadvice.co.uk we have compiled a list of the best alternative mortgages, for all those who are looking for something a little different in their search for an ideal home.
Self build mortgages
Have you ever seen grand designs? Have you dreamed of building your own home, the exact way you want it, from scratch? If so, and you need to borrow money to do this, a conventional mortgage will not work. You will need a self build mortgage, which is only offered by certain lenders.
With self build mortgages, the funds are given to you in stages, rather than as a single lump sum. This is to ensure the money is not blown before the end of the project, and to reduce the lender risk.
Rates can often be higher on self build mortgages, and deposits are sometimes required to be as high as 50%, so it is worth doing as much research as possible if you are looking to go down this route. There is also more paper work involved, and you will have to discuss with the provider projection costs and planning permission.
If you do not keep up with your repayments, your home is still at risk of being repossessed, which may be a harder hit for someone who has put time, money and love into building their own house. It can be a big step, and it’s worth researching costs, times and projected outcomes for a long time before this decision is made.
Marine Mortgages
It may sound like something from a TV show, but many people have made their home in a houseboat, on one of Britain’s many canals or rivers. Houseboats tend to be considerably cheaper than houses or even flats. In 2011, the Residential Boat Owners’ Association estimated that there may have been as many as 15,000 houseboats in the UK, with between 30,000 and 50,000 people living on board. This figure has since increased, as people look for a simpler and cheaper way to live.
There can be complications though. For the mortgage, you’ll need at least a 20% deposit, and the loans come with a 15-year maximum term and must be taken on a repayment basis. You can not get houseboat mortgages through regular mortgage providers or high street banks in the most part. You will need to contact marine firms that specialise in mortgages for boats. Interest rates are also priced considerably higher than on standard mortgage deals.
The boat itself is just the start of the financial outlay. You will need to pay residential mooring costs, for example. The price will vary according to the location of the river. According to David Greenway, author of The Houseboat and owner of one-stop-shop, the Houseboat Centre, the average cost is around £1 per foot of boat, per week. You will also have to put the boat in for a survey that will cost between £700 and £1000. This is to ensure the boat is liveable, and to find out what kind of repairs or alterations it may need.
Disused property
Opting to buy a disused property as a home can have huge money saving benefits. According to The Empty Homes Agency, there are an estimated 870,000 empty homes in the UK and enough empty commercial property to create 420,000 new homes. You can look to your local council, estate agents, online auctions and land for sale that might already have a building on.
It may be tricky getting a mortgage for a disused property. The building itself won’t be worth much until it is renovated, so many people look to borrow money for the initial purchase and the cost of renovation. This is a no go area for most high street banks, because if payments are defaulted lenders are less likely to get their money back by repossessing a half finished, derelict property. Mortgage providers such as The Ecology Building Society, Buildstore, The Co-operative Bank and the Norwich and Peterborough Building Society will be your best bet, but it’s always good to shop around for different offers out there.
If you are looking to buy a property that has not been a residential home before, such as a old storage unit or bunker, you will need to apply to your local council for ‘change of use’ planning permission.
Again, buying a disused home may be cheaper but will also be more work than buying a ready to live in house. You must make sure you do all your research on predicted costs to make sure you do not run out of money halfway through and become broke as well as homeless.
Container homes
Shipping container may not sound like the most comfy of homes, but they have the potential to be as homely and cosy as conventional houses, with a much, much smaller price tag. Container homes are usually in pre built communities, such as Container City, in Trinity Buoy Wharf in London. However, if you are considering ordering a container home direct from a manufacturer you will need to contact your local council seeking planning permission for the land on which you intend to place the container.
Shipping containers can be bought on eBay for between £1,250 and £1,500, but a fully kitted out container in a community will set you back between £38,000 to £47,000. Mortgages are usually a lot easier to come by than the other three types of properties listed in this article, as the containers are seen as an investment when they are already built. If you are considering a pre built container, or thinking about converting one yourself, it’s always best to go to a mortgage adviser to see what options will be available to you.
The annual running costs of shipping container homes are much lower than that of a houseboat. They are mainly favoured by people in freelance work, as they are a lot cheaper than a regular flat but are usually found in the trendy, artistic parts of cities.
So, if you do not fancy taking the traditional route, there are lots more options available to you than the ones we have listed here, such a motorhomes, straw bale homes and even garages. If you are considering applying for a mortgage for any of these homes, it is always best to speak to a mortgage adviser to see what kind of options there are out there for you. For more information, please call our financial advisers on 0800 092 1245 or ask us a question online.
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