When purchasing a new home or property in the UK, it’s common practice for mortgage lenders to require certain assurances that the property is a sound investment. One such requirement that often arises is the need for a structural warranty. But what exactly is a structural warranty, and do you really need one to secure a mortgage in the UK? In this guide, we’ll explore the ins and outs of structural warranties and their role in the mortgage approval process.
What is a Structural Warranty?
A structural warranty, also known as latent defects insurance or new build warranty, is a form of insurance that provides protection against structural defects in a newly built or newly converted property. These defects might not be immediately apparent but can become evident over time, potentially leading to costly repairs. A structural warranty typically covers a specific duration, commonly ten years from the completion of the construction project.
The Role of Structural Warranties in Mortgages
While not a legal requirement, many mortgage lenders in the UK insist on a structural warranty as part of their lending criteria.
This requirement serves several purposes:
Risk Mitigation: Mortgage lenders want to ensure that the property used as collateral for the loan retains its value. A structural warranty helps mitigate the risk of unforeseen structural issues that could devalue the property.
Buyer Confidence: A property covered by a structural warranty can be more appealing to potential buyers in the future. It assures them that the property has been built to specific standards and is protected against structural defects.
Compliance: Some lenders may have internal policies or requirements that mandate a structural warranty for certain types of properties or construction projects.
Protection for the Borrower: While the warranty primarily benefits the lender, it can also provide peace of mind to the borrower by ensuring that their investment is protected.
Should You Get a Structural Warranty?
If your mortgage lender requires a structural warranty, obtaining one is essential for securing your mortgage. Even if it’s not a lender requirement, getting a structural warranty can be a wise investment to protect your property and reassure future buyers.
When getting a structural warranty, it’s essential to choose a reputable provider and understand the terms and coverage. Not all structural warranties are the same, so be sure to read the policy carefully and ensure it meets your needs.
While a structural warranty is not a legal requirement for obtaining a mortgage in the UK, it is often a practical necessity as many lenders require it. Even when not mandated, having a structural warranty can provide valuable protection for your property and enhance its marketability. When in doubt, consult with your mortgage lender and a structural warranty provider like Advantage to ensure you meet all the necessary requirements for your mortgage application. Contact us today to find our more!