Equity Release with Wattle and Daub Construction
Wattle and daub construction is part of Britain’s architectural story. It has been used in everything from timber-framed cottages to rural farmhouses. These types of properties have remained for centuries, often outlasting more modern buildings.
However, when it comes to applying for an equity release loan, the construction type of these properties can present issues and challenges for you.
If you own a wattle and daub home and are considering equity release, then the key issue is that not all lenders will be confident about the property’s future saleability.
In practice, whether or not you will get approved for an equity release loan will largely come down to what the surveyor writes in their report and what the lending criteria might be.
Most equity release lenders want reassurance that when the borrower passes away or moves into a care home and the loan needs to be repaid, that the property will be sold without any issues.
This article explores how equity release works when it comes to wattle and daub construction, what lenders look for and how a lifetime mortgage application is assessed on a case by case basis.
Understanding Wattle and Daub Construction
Wattle and daub are a traditional building method which dates back to hundreds of years ago. It usually involves a timber frame, a wooden structure made out of wooden strips and a mixture of clay, straw and sand to fill in any gaps.
This building method and technique was common throughout the medieval and Tudor period and can still be found in many listed buildings and cottages across some of the home counties such as Kent, Suffolk, Herefordshire and even parts of the Midlands.
While these types of homes can be structurally sound when they are maintained properly, they are still classified as non-standard construction, which is what lenders are most interested in when it comes to offering a mortgage or an equity release loan.
What Is Equity Release?
Equity release allows anyone who owns their own home worth over £70,000 over the age of 55 the chance to access and release some of the value tied up in their home without having to sell, move or downsize properties.
The most common type of equity release is a lifetime mortgage, where you remain the sole owner of your property but release the cash that is tied up inside your home [1].
During a lifetime mortgage, you remain living in your property and are able to spend the money that you have released on whatever you want to. This might include home renovations, a family holiday, grandchildren or paying off any outstanding loans or debt.
The loan does not need to be repaid until after you pass away or move into a care home, upon which the house will be sold and the proceeds used to repay the equity release loan.
As with any other type of loan, you will be charged interest on your equity release loan which will need to be repaid and will compound over the years, although this will remain fixed for the duration of your loan.
Your loan will last until you pass away or move into a care home, meaning that it could last for decades. During this time, the compound interest will round up and increase the loan amount significantly over the years.
The value of your property will pay off the loan amount. If the proceeds from the sale of your house does not cover the loan amount, then your lender will pay off the difference under the no negative equity guarantee.
Why Construction Type Matters to Equity Release Lenders
When an equity release lender offers a lifetime mortgage, they are effectively allowing you to temporarily borrow that money without asking for repayment for many years, sometimes decades. However, it is important to remember that the security for that loan is the property itself [2].
Unlike conventional mortgages, there are no monthly affordability checks in the traditional sense. Instead, the lender’s primary concern is whether or not they are going to get their money back, including the interest they are charging.
This comes down to whether or not your property is going to maintain its value over the years.
If the answer is yes, then the lender will likely proceed with their equity release loan. If there are doubts about resale prospects, they may decline the equity release application.
However, wattle and daub homes might put the value of your home under risk. This is because they are very rare compared to modern houses and because they require specialist maintenance over many years. This means that they might not hold well, especially with challenging weather conditions.
Likewise, people might be reluctant to buy a home with this type of construction. Buyers may be scared or think that the property is too risky to buy.
In addition to this, most insurance companies will charge a premium and repair costs can be higher. All of these things combined make things very difficult for lenders who offer equity release loans.
The Central Role of the Survey
In reality, most decisions about equity release on a wattle and daub properties come down to the surveyor’s notes and opinion.
When you apply for a lifetime mortgage, the lender will carry out a valuation survey.
This survey assesses the structure of the home, any evidence of dampness or decay, the condition of the property, the condition of any repairs and even where the property is located.
If the surveyor reports that all of the above are okay and sound, then they will likely be encouraged to allow the lender to proceed with the equity release loan.
However, some lenders may be prepared to consider the application if there are any issues such as dampness, rot or limited buyer appeal. If these things are severe, then the lender is far more likely to decline an equity release application.
This is why equity release on a wattle and daub home is very much assessed on a case by case basis and why you should always consider getting professional help and support
Case by Case Lending Decisions
When it comes to equity release, it is important to understand that there is no blanket rule when it comes to what lenders do and do not accept.
It is important to remember that once you apply for an equity release loan, there is no guarantee of approval.
Usually, equity release lenders will consider numerous different factors such as some of the ones listed below for you.
1. The Property Value
When it comes to equity release, higher value properties may be more appealing to lenders because there is more scope when it comes to the loan-to-value ratio.
2. The Location
Likewise, a picturesque, listed cottage or house in a desirable rural village may attract a lot of attention and strong buyer demand, meaning that it will most likely sell for market value, or above market value.
This means that the lender will be confident lending you money. A similar property in a less sought-after area may be harder to sell as therefore they will feel less confident that they will one day get their money back.
3. The Overall Condition of the Property
Finally, a well-maintained property with well-done repairs is viewed very differently from one with visible neglect or structural issues as a result of not being cared for.
Common Challenges with Wattle and Daub Homes
Even though an equity release lender might be willing to lend you money, it is important to understand that living in a home made from wattle and daub does not come without its challenges, which you should bear in mind if you are selling or buying this type of property. Some of these challenges are listed below for you [3].
1. Damp and Moisture
Properties that are made from wattle and daub materials are breathable. Modern cement renders can trap moisture, often leading to decay. This is why surveyors pay close attention to inappropriate previous repairs done to the property.
2. Timber Decay
When it comes to this type of property, the timber frame is the backbone of the structure. Any evidence of rot or insect damage can raise major red flags when it comes to the overall structural integrity of the property.
3. Structural Movement
Finally, some movement in the property is normal when it comes to older buildings, although any ongoing movement may concern lenders. This will include any cracks in the walls, bricks or any sinking which might indicate subsidence.
Alternatives If Equity Release Is Declined
It is important to understand that if a lifetime mortgage or other equity release plan is not available to you, then there may still be other options that you should explore.
For example, you could consider downsizing to a smaller property, take out a retirement interest-only mortgage or remortgage your home.
Each of these options have their own implications and whether or not you will be approved will depend on personal circumstances.
If you want to know what your options are, then you should speak to a qualified equity release or financial specialist to determine what your options are and how much the options available to you might cost you.
The Importance of Getting Specialist Advice
It is important to understand that equity release is a regulated financial product in the UK.
If you are considering taking out an equity release loan, then advice must be provided by a qualified equity release adviser who is authorised by the Financial Conduct Authority.
This is particularly important when it comes to dealing with non-standard construction, such as wattle and daub. This means that experience matters.
An equity release adviser who is familiar with these types of properties will understand which lenders are likely to approve your loan, how the survey will impact your eligibility and what documents you might need.
A qualified equity release adviser can also manage your expectations from the very start, explaining that there is never any guarantee of your application being accepted.
Conclusion
To conclude, owning a wattle and daub home means that it might make your equity release journey a bit more complicated. This is because when considering equity release, the construction type introduces an additional layer of complexity.
Equity release lenders are primarily concerned with whether or not they will get their money back once you sell the property.
When it comes to equity release, the survey report is very important. Negative remarks on the survey about condition or saleability can put your loan at risk.
Seeking qualified financial advice early in the process can help clarify what may be achievable and whether alternative solutions should also be considered.
For more information on equity release, speak to our qualified team at Equity Release Warehouse by calling us on 0330 058 1579 or by visiting us online by searching for www.equityreleasewarehouse.com.
References
[1] https://www.equityreleasecouncil.com/what-is-equity-release/
[3] https://www.insituscp.co.uk/wiki/wattle-and-daub-wall-damp/
