Can you get a mortgage without a structural warranty?

For anyone building or converting a new home, it’s recommended for the builder to purchase a structural warranty before construction even begins. This insurance policy will legally protect the homeowner if structural defects are discovered during the first several years after completion.

Even the best of builders can’t always guarantee there won’t be any issues with materials or the quality of their work down the line. A Building Control Completion Certificate can confirm that it meets health and safety regulations, but it won’t protect you financially if something goes wrong.

Just as you need reassurance that you’re protected against future damage and structural failures, so will any financial lenders before they help you to purchase the property. Let’s look further into the reasons why a 10-year structural warranty should be a priority.

Why do I need a 10-year structural warranty?

If structural issues become apparent in the years after work is completed, fixing them can be very expensive for the homeowner. However, when you’re insured against defective design, materials, or workmanship, the policy can cover the costs of rebuilding or rectifying those structural problems.

A structural warranty is necessary for all types of properties, whether they’re a new build or conversion, from single houses to apartment buildings. Getting a warranty in place before work starts protects the owner or buyer if the building company goes bankrupt during the process.

Structural warranties usually cover a period of 10 years from the date of completion of the construction works. This is why they’re known as ’10-Year Structural Warranties’ – but do you know exactly what they cover and what they don’t?

What does a 10-year structural warranty cover?

A good structural warranty should protect you from the beginning, meaning that if the builder becomes insolvent before finishing construction, you won’t lose your deposit. Once the property is complete, the 10-period will start.

The first 2 years cover defect insurance, which states that the builder is legally obliged to fix any issues that occur due to defective construction during this time – such as faulty pipes or window sealing – at no extra cost to you.

From the third year onward, the remainder of the 10-year policy covers structural insurance. During this period, the builder will only be responsible for major structural problems, such as roofs and ceilings, foundations, or load-bearing parts of floors.

Smaller issues, such as fixtures and fittings, are now the homeowner’s responsibility to deal with. The structural warranty won’t cover natural wear and tear, lack of maintenance, or weather damage. It’s usually just a precaution, but a worthwhile one – you don’t want to be shelling out for structural repairs several years after buying your new home.

Can’t I get a CML Professional Consultant’s Certificate instead?

You may have heard that an architect’s certificate from the Council of Mortgage Lenders (CML) is cheaper than a structural warranty, and wonder why this isn’t the first option. Unlike a structural warranty, a CML certificate, or Professional Consultant’s Certificate (PCC), isn’t actually an insurance policy.

The certificate simply states that your building has been completed to the appropriate legal standards, and only holds the builder liable for 6 years as an extension of their indemnity insurance. During this time, if a structural issue develops, the owner has to take the building company to court.

The burden of proving professional negligence then lies on the buyer or homeowner, which can take a long time and a lot of money to cover the legal proceedings. If you don’t win your case, or if the company goes out of business before the problems occur, then the costs will fall back on you.

A PCC or CML certificate is a valid option for self-builders with a limited budget, especially if it’s a conversion over a completely new build. Some lenders will accept an architect’s certificate, but many won’t. If you want peace of mind that you’re totally protected against the potential risks, and improved chances of securing a mortgage, it’s worth investing in a structural warranty instead.

Do I still need home insurance if I have a structural warranty?

A new home warranty is not the same thing as a home insurance policy, so yes – you do need to have both. Mortgage lenders expect applicants to have both of these policies in place, because they want to protect their investment in the building just as much as you do until you’ve paid it off.

As we’ve discussed, the structural warranty doesn’t cover accidents, ageing, or weather damage, which is where building insurance comes in. This element of home insurance covers the integrity of the structure itself, but doesn’t cover things like poor construction or contaminated land.

It’s also advisable for any homeowner to get contents insurance, which covers your possessions in case of theft, fire, flooding, or accidental damage. However, this type of home insurance isn’t a requirement for financial lenders, as they only cover the costs of the structure and not its contents.

Can I legally get a mortgage without a structural warranty?

Structural warranties aren’t technically a legal requirement, so it’s not compulsory to get one. That said, you’re likely to find it incredibly difficult to secure a mortgage loan without one. Even on the rare occasion that a lender doesn’t require this, they’re likely to lend you less than they would if you did have a structural warranty, as not having one makes you more of a financial risk for them.

Most mortgage providers require a structural warranty to be in place before the start of any building work. They may still accept your initial application if you don’t have one, but only if you agree to complete the commitment before the project is finished. The property inspections that occur as part of the policy can be used as proof of the project’s current stages for the release of funds.

Another benefit is that selling your property will be much easier, if you intend to do this within the next 10 years after purchase. It will be a much more attractive prospect to new buyers if they know that this insurance policy is in place – the warranty stays with the property, so it should transfer to the new homeowners for the remainder of the term if they complete the sale.

You should bear in mind that any further construction work that takes place during those 10 years may invalid the first warranty, so you’re likely to need to update or replace the contract. Always check the small print to confirm that your warranty covers everything you need it to, and go with a CML-approved structural warranty provider, as banks are more likely to accept their certificates.

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