Mortgages for barn conversion
Are you interested in gaining more knowledge about mortgages for barn conversions?
Book a no-obligation consultation with our expert mortgage advisors today.
Barn conversions can offer a unique opportunity to create a bespoke home filled with character and history. However, financing a barn conversion is not the same as securing a mortgage for a standard residential property. A barn conversion mortgage is a specialised type of lending product designed to finance the purchase of the barn and the costs of the conversion process. It typically involves a more complex application process and stricter lending criteria due to the additional risks involved.
This guide will answer some of the most common questions about barn conversion mortgages from a UK perspective, covering topics such as the application process, lending criteria, planning permission requirements, and the challenges of securing a mortgage for a barn conversion. Whether you’re a first-time buyer, a self-employed individual, or someone considering remortgaging your current home to fund a barn conversion, this guide will provide valuable insights to help you navigate this exciting journey.
A barn conversion mortgage is a specific type of mortgage designed for properties that are being converted from one type of use to another. In this case, it’s specifically for the conversion of a barn into a residential property.
This type of mortgage is slightly different from a standard residential mortgage because it’s designed to deal with the additional complexities and risks associated with the conversion process. Lenders offering these mortgages take into consideration the costs of the renovations and the expected value of the converted property.
The application process for a barn conversion mortgage typically involves presenting detailed plans of the conversion, cost estimates, and sometimes proof of planning permission for the conversion. Additionally, some lenders may require proof of relevant building regulations approval.
Barn conversion mortgages often come in the form of a self-build mortgage. With these, the mortgage funds are typically released in stages as the conversion progresses, rather than all at once like a traditional mortgage. This helps manage risk by ensuring that the borrower has the funds necessary to complete each stage of the project. It also provides reassurance to the lender that the project is progressing as planned.
Getting a barn conversion mortgage involves several key steps:
Initial Assessment: Before anything else, it’s a good idea to assess the feasibility of the project. This includes checking the condition of the barn, considering planning permission requirements, and estimating the potential costs and timescale for the conversion.
Planning Permission: Before applying for a mortgage, you’ll typically need to secure planning permission for the barn conversion from your local authority. This process involves submitting detailed plans of the conversion and could take several months.
Estimate Costs: Next, you’ll need to get a detailed estimate of the costs of the conversion. This should include both the cost of buying the barn, if you haven’t already, and the cost of the conversion work itself. You may need to work with a builder or a quantity surveyor to get accurate estimates.
Mortgage Application: Once you have planning permission and a cost estimate, you can apply for a mortgage. You’ll need to provide the lender with all the details of the project, including your plans, cost estimates, and evidence of your income and ability to repay the loan. Lenders will also carry out a valuation to assess the projected post-conversion value of the property.
Loan Release: If your application is successful, the lender will usually release the funds in stages as the conversion progresses. This may be after key milestones are reached, such as when the structure is wind and watertight, or when the first and second fix stages are completed.
Remember, each lender will have their own criteria and process for barn conversion mortgages. It can be complex, and it may be beneficial to work with a specialist mortgage broker or adviser who has experience with this type of loan. Also, keep in mind that this type of mortgage often comes with higher interest rates than standard residential mortgages due to the increased risk for the lender.
Yes, it is certainly possible to get a mortgage for a barn conversion. These types of mortgages are specialised products offered by some lenders, known as barn conversion mortgages or self-build mortgages.
In many cases, these mortgages are structured so that money is released in stages as the conversion project progresses, which differs from a standard residential mortgage where the entire loan amount is typically released at once. The aim is to manage the risk associated with the conversion process.
When applying for a barn conversion mortgage, you will usually need to provide detailed plans of the proposed conversion, cost estimates for the work, proof of planning permission, and possibly proof of relevant building regulations approval. The lender will also conduct a valuation to assess the expected value of the finished property.
The terms and conditions of barn conversion mortgages, including interest rates, can vary between lenders. Therefore, it can be beneficial to work with a mortgage broker or advisor who specialises in this area to help find the most suitable product for your needs.
However, it’s worth noting that barn conversion mortgages may be viewed as more risky by lenders due to the uncertainties inherent in the conversion process. This can result in stricter lending criteria and potentially higher interest rates compared to more standard types of mortgages.
For a barn conversion, you will most likely need a specific type of mortgage, known as a self-build mortgage or a renovation mortgage, depending on the extent of the work required.
A self-build mortgage is designed for individuals who are building their own home from scratch, but it can also be used for significant renovation projects like barn conversions. These mortgages work by releasing funds in stages as the project progresses.
The stages might include the purchase of the land or existing building, the initial construction or conversion work, making the building watertight, and interior finishing. Each stage of fund release usually requires a site visit and report from a surveyor to ensure the project is on track.
In some cases, a renovation mortgage might be appropriate if the barn is already in a habitable condition and just requires updates or improvements. These are more like standard residential mortgages, but they also consider the increased value of the property post-renovation.
A variety of lenders, including some high-street banks, building societies, and specialist lenders, have historically offered self-build or barn conversion mortgages. These include but are not limited to:
It’s always advisable to do thorough research or work with a mortgage broker to find the most suitable lender and mortgage product for your specific needs. Each lender will have different interest rates, lending criteria, loan-to-value ratios, and other terms, so what’s “best” can vary depending on your individual circumstances.
Remember that barn conversion mortgages tend to be more complex than standard residential mortgages, and not all lenders offer them. These mortgages often require a higher deposit, as lenders typically see them as higher risk due to the uncertainties involved in the conversion process. Also, consider the staged payment structure, as the funds are usually released at different stages of the project, which differs from the lump sum disbursement in traditional mortgages.
Barn conversion mortgages come with their own unique set of advantages and disadvantages, much like any other type of mortgage. Here are some to consider:
Enables unique projects: A barn conversion mortgage allows you to undertake unique and individual projects that might not otherwise be financially feasible, such as converting a barn into a dream home.
Potential for increased value: If managed well, barn conversions can significantly increase the value of the property, leading to potential financial gain in the long run.
Staged funding: Funds are usually released in stages as the project progresses, which can be beneficial in managing cash flow and ensuring the project stays on track.
Flexible repayment structure: Some lenders offer an interest-only repayment structure during the conversion process, with conversion to a standard repayment mortgage once the property is habitable.
Higher deposit requirement: Barn conversion mortgages are usually seen as higher risk by lenders, which means they often require a larger deposit than standard residential mortgages.
Increased complexity: The application process for a barn conversion mortgage can be complex. You’ll likely need to provide detailed plans and cost estimates for the project, as well as secure planning permission.
Potential for increased costs: Building projects, particularly conversions, often encounter unexpected issues that can result in costs exceeding initial estimates.
Limited choice of lenders: Not all lenders offer barn conversion or self-build mortgages due to the associated risk, which can limit your options.
Higher interest rates: Given the higher risk associated with barn conversion mortgages, they often come with higher interest rates compared to standard mortgages.
Risk of incomplete project: If the project runs over budget or encounters other issues, there’s a risk it may not be completed, leaving you with an uninhabitable property and a large debt.
It’s essential to thoroughly consider these pros and cons and potentially seek advice from a financial advisor or mortgage broker before deciding to go ahead with a barn conversion mortgage.
Yes, you can usually switch your barn conversion mortgage to a standard residential mortgage once the conversion is complete and the property is deemed habitable. This process is often referred to as ‘remortgaging’ or ‘exit strategy’.
In fact, many self-build or barn conversion mortgages are structured with this in mind. During the conversion process, the loan might be on an interest-only basis, which means you’re only paying off the interest on the loan and not the capital. Once the property is complete, you can then switch to a residential mortgage, which is typically a repayment mortgage where you pay off both the interest and the capital.
Doing this might allow you to secure a more favourable interest rate or terms, as residential mortgages often come with lower rates compared to self-build or barn conversion mortgages.
Keep in mind, though, that the process will involve a new mortgage application, and you will need to meet the lender’s criteria at that time. It’s also worth considering potential fees or early repayment charges associated with switching mortgages.
Valuing a barn for a conversion mortgage involves assessing not just the current value of the property but also the expected value once the conversion has been completed. This process can be more complex than for a standard residential mortgage and typically involves several key steps:
Current value: The lender will usually start by assessing the current market value of the barn in its existing state. This will be based on factors such as its size, location, condition, and the value of similar properties in the area.
Conversion plans: The lender will also need to consider the proposed plans for the conversion. This includes the design, the quality of the materials and fixtures to be used, and the planned functionality of the completed property.
Cost estimates: As part of your mortgage application, you will typically need to provide detailed cost estimates for the conversion. The lender will need to consider these to assess the feasibility of the project and whether the proposed loan is sufficient to cover these costs.
Post-conversion value: The lender will then estimate the expected value of the property once the conversion has been completed. This will be based on the current value, the proposed plans, and the potential market value of similar converted properties in the area.
Risk assessment: The lender will also need to assess the risks associated with the conversion. This can include factors such as potential planning or construction issues and the likelihood of the project being completed on time and within budget.
Keep in mind that this process can vary between different lenders, and it’s always a good idea to speak to your lender or a mortgage advisor to understand their specific valuation process. Also, due to the increased risk associated with barn conversions, lenders may offer a lower loan-to-value ratio compared to standard residential mortgages, meaning you might need a larger deposit.
The maximum loan you can get on a barn conversion mortgage depends on a number of factors and can vary significantly between different lenders. Here are some of the key factors that can influence the maximum loan amount:
Loan-to-value ratio (LTV): This is the percentage of the property’s value that the lender is willing to loan. For barn conversion mortgages, the LTV is often lower than for standard residential mortgages due to the increased risk involved. This could typically range from 60% to 75%, although it could be higher or lower depending on the specific circumstances and the lender’s policies.
Cost estimates: The lender will need to consider the estimated costs of the conversion when determining the maximum loan amount. This includes the cost of buying the barn (if you haven’t already) and the projected cost of the conversion work.
Post-Conversion Value: The lender will also consider the estimated value of the property once the conversion has been completed. They will want to ensure that this is in line with the total amount of the loan.
Affordability assessment: As with any mortgage, the lender will also need to carry out an affordability assessment. This will look at your income, outgoings, and other financial commitments to determine how much you can realistically afford to borrow.
Credit Score: Your credit history and credit score can also affect the maximum loan amount, with a better credit score potentially allowing you to borrow more.
Planning permission: Lenders will want to see that you have the necessary planning permission for your conversion project or that the project can be carried out under permitted development rights.
Detailed plans and cost estimates: You will typically need to provide detailed architectural plans and cost estimates for the project. These should be prepared by a qualified professional and should provide a comprehensive overview of the proposed conversion.
Experience and expertise: Some lenders may want to see that you or your builder has previous experience with similar conversion projects. They may ask for references or examples of previous work.
Personal finances: As with any mortgage application, lenders will assess your personal finances. This includes your income, outgoings, credit score, and any existing debts or financial commitments. They will want to ensure that you can afford the mortgage repayments.
Deposit: Lenders typically require a higher deposit for barn conversion mortgages compared to standard residential mortgages due to the increased risk. This can often be around 25-40% of the project cost but can vary between lenders.
Post-conversion value: Lenders will assess the potential value of the completed project to ensure it aligns with the amount you’re looking to borrow.
Exit strategy: Lenders will want to see a clear exit strategy. This is typically the point at which the conversion is completed, and the loan can be switched to a standard residential mortgage.
When applying for a barn conversion mortgage, lenders will typically require you to provide a range of documents to assess the feasibility of your project and your ability to repay the loan. Here are some of the common documents you might need:
Proof of income: This could include payslips, bank statements, or tax returns. If you’re self-employed, you may need to provide business accounts or other evidence of your income.
Proof of identity and address: This might include your passport, driving license, utility bills, or council tax statements.
Planning permission: Proof that you have obtained planning permission for your conversion project or that it falls within permitted development rights.
Detailed plans and cost estimates: Detailed architectural plans and cost estimates for your conversion project, prepared by a qualified professional.
Builder’s details: Information about the builder or contractor who will be carrying out the work. This might include their qualifications, references, or examples of previous work.
Land registry documents: Documents showing your ownership of the property. If you’re buying the barn as part of the project, you’ll need to provide details of the purchase.
Exit strategy: A clear plan for how you intend to repay the loan once the conversion is complete, typically through remortgaging to a standard residential mortgage.
Valuation report: Some lenders might require a professional valuation of the barn in its current state and an estimation of its value once the conversion is complete.
This is not an exhaustive list, and the specifics can vary between different lenders. It’s always a good idea to check with your lender or mortgage advisor to understand exactly what documentation you’ll need for your application. They can also help you prepare and present your application in a way that gives you the best chance of approval.
Insurance is an essential consideration for a barn conversion project to cover potential risks and liabilities. Here are the main types of insurance you might need:
Self-build insurance: This type of insurance is designed specifically for self-build and conversion projects. It typically covers the building work itself, including materials, tools, and equipment on site. It can also cover your liability for any injuries or accidents that occur on the site.
Public liability insurance: This covers any injuries or damage to third parties that might occur as a result of your project. This could be important if, for example, someone is injured while visiting your site.
Employer’s liability insurance: If you are employing anyone to work on your project, even if they are contractors, you are legally required to have employer’s liability insurance in the UK. This covers any claims for injury or illness that might be made by people working on your project.
Contract works or all risks insurance: This covers the cost of repairing or redoing work that’s been damaged by an insured event, such as a fire or flood. It typically covers the work in progress, as well as materials and fittings.
Structural warranty or latent defects insurance: This provides cover for any structural defects that become apparent after the project is completed. It typically lasts for 10 years and is often a requirement of mortgage lenders.
Site insurance: This is a specific type of insurance that covers the actual building site. It can include coverage for things like theft of tools or equipment or damage to the site itself.
Renovation insurance: This is a specific policy to cover properties undergoing major renovation or conversion. It will cover both the existing structure and the works in progress.
In the UK, full planning permission is usually required when you want to carry out development work that doesn’t fall under the scope of permitted development rights. Development, in this context, refers to building something new, making a major change to your building, such as an extension, or changing the use of your building.
For barn conversions specifically, you will usually need to apply for full planning permission if:
The Conversion falls outside of class Q rights: As mentioned in previous responses, under Class Q of the General Permitted Development Order, some agricultural buildings may be converted to residential use without the need for full planning permission. However, this is subject to a number of limitations and conditions, and prior approval will still be required.
The building Is listed or in a designated area: If the barn is a listed building, or it’s located in a designated area such as a National Park, an Area of Outstanding Natural Beauty, or a Conservation Area, you will typically need to apply for full planning permission.
Significant structural changes are needed: If your proposed conversion involves major structural changes to the building, such as altering the building’s footprint or height, you will usually need full planning permission.
The use will change significantly: If you’re proposing to change the use of the building significantly – for example, from agricultural use to multiple residential units – you’ll likely need full planning permission.
Please note that securing planning permission or prior approval is usually a prerequisite for obtaining a barn conversion mortgage. Lenders will want to be sure that the conversion is legally permissible before they agree to lend you the money.
Agricultural restrictions, also known as agricultural ties or occupancy conditions, can make it more difficult to secure a mortgage. These restrictions usually stipulate that the occupier of the property must be primarily employed, or last employed, in agriculture or forestry in the local area.
Because of the potentially limited market for resale or rental due to these restrictions, many traditional mortgage lenders view properties with agricultural ties as higher risk. Therefore, they might be hesitant to offer a mortgage.
However, there are some specialist lenders who may consider lending on properties with agricultural ties, especially if the borrower is indeed involved in agriculture or forestry or if they have a detailed and credible plan to have the restriction removed. These mortgages are likely to be more expensive than standard residential mortgages due to the perceived increase in risk, and a larger deposit may be required.
If you’re looking to convert a barn with an agricultural tie into a residential property, you may also need to negotiate the removal of the tie as part of the planning permission process. This can be a complex process and may require demonstrating that there is no longer a need for the dwelling to be occupied by someone involved in agriculture in the area.
It’s highly recommended to seek advice from a mortgage advisor with experience in this area, as well as a planning consultant or solicitor if you’re considering a project involving a property with an agricultural tie. They can help you understand your options and guide you through the necessary processes.
Yes, having a clear right of way is essential when undertaking a barn conversion. The right of way ensures you have the legal right to access your property from the public road. This could be especially important if your barn is set back from the public road or if you need to cross someone else’s land to reach your barn.
Without a clear and established right of way, you could face difficulties with the delivery of building materials, access to construction equipment and workers, and general use of the property once the conversion is complete. It could also pose issues when you come to sell the property.
If the right of way is not already in place, you might need to negotiate this with the landowner. This could involve a legal agreement and potentially payment for the right of way. If any disputes arise regarding this right of access, they can sometimes be complex and time-consuming to resolve, so it’s best to establish your right of way before beginning your project.
Keep in mind that proof of a clear right of way may be required when applying for a mortgage, as lenders will want to ensure that there will be no legal issues that could affect the value or saleability of the property in the future.
It’s recommended to seek advice from a solicitor or legal advisor with experience in property and land law to ensure all necessary rights are properly established and documented.
Yes, it is possible to get a mortgage for a barn conversion on a listed building, but it can be more challenging compared to a non-listed building.
A listed building is a building of special architectural or historic interest that is protected by law. Any changes to a listed building, including conversions, require Listed Building Consent in addition to any necessary planning permissions.
Because of the additional constraints and potential costs associated with listed buildings, many traditional mortgage lenders may view them as higher risk. These risks include the potential for more expensive repairs, stricter building regulations, and a potentially smaller market for resale due to the unique characteristics and restrictions associated with listed buildings.
However, there are specialist lenders who understand these challenges and are willing to provide mortgages for listed building conversions. They will likely want to see detailed plans for the conversion, proof of any necessary permissions, and potentially an expert report on the condition of the building.
Interest rates may be higher compared to standard residential mortgages, and a larger deposit may be required. The lender may also want to see evidence of a suitable contingency fund to cover any unforeseen expenses that might arise during the conversion due to the building’s listed status.
Securing a barn conversion mortgage can come with a unique set of challenges due to the complexity and risks associated with these kinds of projects. Here are some common challenges you might encounter:
Higher deposit requirements: Because of the perceived higher risk, lenders typically require a larger deposit for barn conversion mortgages compared to standard residential mortgages. This can often be around 25-40% of the project cost but can vary between lenders.
Availability of lenders: Not all lenders offer barn conversion mortgages. You might need to approach specialist lenders or use a mortgage broker who has experience with these types of loans.
Valuation challenges: The future value of a converted barn can be difficult to estimate, especially if there are few comparable properties in the area. Lenders will typically want a professional valuation, which might be more complex and costly compared to a standard residential valuation.
Planning permission and building regulations: Securing the necessary planning permissions and ensuring your project complies with all relevant building regulations can be complex and time-consuming. Delays or issues with permissions can cause difficulties with your mortgage application or drawdown schedule.
Construction risks: Like all construction projects, barn conversions can face delays, cost overruns, or issues with contractors. These can impact your budget and the timeline for your project, which can, in turn, affect your mortgage payments and overall financing.
Insurance requirements: As discussed earlier, you’ll need to ensure that you have appropriate insurance in place for your project, which can be more complex and expensive compared to standard residential property insurance.
Listed building or agricultural tie restrictions: If the barn is a listed building or has an agricultural tie, this can add additional complexities to your project and your mortgage application.
Exit strategy: You’ll need to have a clear plan for repaying the loan once the conversion is complete, typically by switching to a standard residential mortgage. This can depend on the successful completion of your project and the property’s post-conversion value.
Managing a barn conversion project while repaying a mortgage can indeed be challenging, as you’ll have to balance the costs of the project with your ongoing mortgage repayments. Here are some tips to help you manage this:
Create a detailed budget and schedule: Start by making a detailed budget and schedule for your project. Include all of your expected costs and timelines, and build in a contingency fund for any unexpected expenses. This will give you a clear understanding of when you’ll need to make payments for different parts of the project and how this aligns with your mortgage repayments.
Secure appropriate financing: Barn conversion mortgages often offer stage payments, which means the money is released in stages as the project progresses. This can help you manage your cash flow during the project, as you’ll only start repaying the mortgage once the money is released.
Keep on top of your project management: Regularly review and update your project plan, and keep close tabs on your costs and schedule. This will help you identify any potential issues early, so you can adjust your plans and budget accordingly.
Maintain a good relationship with your lender: Keep your lender informed about the progress of your project, and let them know as soon as possible if you encounter any difficulties. They may be able to provide advice or adjust your repayment schedule to help you manage your mortgage.
Consider hiring a project manager: If you’re not experienced in managing construction projects, consider hiring a project manager to oversee the work. While this will add to your costs, it could save you money in the long run by helping your project run more smoothly and efficiently.
Switch to a standard mortgage once complete: Once your barn conversion is complete, you’ll typically want to switch to a standard residential mortgage, which will likely offer a lower interest rate. You should plan for this in advance and ensure that your converted barn will meet the lender’s criteria for a standard mortgage.
Buying a completed barn conversion can be a great option if you’re looking for a unique, character-filled home and would prefer not to manage a conversion project yourself. However, it’s important to understand the steps and considerations involved in this process:
Search and viewings: Your first step is to find barn conversions for sale in your preferred area. Property websites, estate agents, and auction catalogues can be good places to start. When viewing barn conversions, look not only at the features and finish of the property but also its practicality for your lifestyle.
Mortgage pre-approval: Before making an offer, you’ll want to get pre-approved for a mortgage. This involves a lender checking your financial situation and credit history to determine how much they’d be willing to lend you.
Offer and negotiations: Once you’ve found a barn conversion you’d like to buy, you can make an offer through the estate agent. There may be some negotiations over price and terms before the offer is accepted.
Solicitor and surveys: You’ll need to hire a solicitor to handle the legal aspects of your purchase. You’ll also want to have a thorough survey done on the property. Given the unique nature of barn conversions, it’s wise to hire a surveyor with specific experience in this area. They can check for any structural issues, as well as ensuring that all necessary planning permissions and building regulations approvals were obtained for the conversion.
Mortgage application: Once your offer has been accepted and you’re satisfied with the survey results, you can proceed with your formal mortgage application. The lender will conduct a valuation of the property as part of this process.
Exchange and completion: If your mortgage application is approved and all the legal checks are complete, you can exchange contracts with the seller. This is when the sale becomes legally binding. On the agreed completion date, you’ll pay the remaining purchase price, the property will be transferred into your name, and you can move in.
Securing a barn conversion mortgage involves several costs that you’ll need to factor into your project budget. Here’s a breakdown of some of these costs:
Deposit: As a rule of thumb, the more you borrow, the higher the interest rate you may be charged. Therefore, a larger deposit (around 25-40% of the project cost) could help secure a more favourable interest rate.
Arrangement fee: This is a charge levied by your mortgage lender for setting up the mortgage. It can range significantly from lender to lender and can sometimes be added to your mortgage, but this will increase the overall amount you repay.
Valuation fee: The mortgage lender will require a valuation of the property to assess its value before and after the conversion. This can be more complex for a barn conversion than a standard property, so the cost may be higher.
Surveyor’s fees: You’ll likely need a surveyor to assess the condition of the barn before you start the conversion and potentially at various stages during the project.
Architect/designer fees: If you’re planning a significant conversion, you’ll likely need an architect or designer to produce detailed plans and maybe to oversee the project.
Planning permission and building regulations fees: You’ll need to budget for the cost of obtaining planning permission and building regulations approval. These costs can vary depending on the local authority and the complexity of your project.
Legal fees: You’ll need a solicitor to handle the legal aspects of the property purchase and mortgage. This can be more complex for a barn conversion, so costs may be higher than for standard residential purchases.
Insurance: Specialist renovation insurance will be needed during the conversion, and once the property is habitable, you’ll need buildings insurance. The cost will depend on the value of the property and the scale of the project.
Construction and renovation costs: This is likely to be your biggest expense. The cost will depend on the scale of the project, the condition of the barn, and your design choices. It’s important to have a detailed budget for this and to include a contingency for unexpected costs.
Mortgage broker fees: If you choose to use a mortgage broker to help you find a suitable lender and mortgage product, you’ll need to pay their fees as well.
It’s important to have a thorough understanding of all potential costs before starting a barn conversion project. It can also be helpful to speak to a financial advisor or mortgage broker to make sure you have a realistic budget and financing plan.
The cost of a barn conversion can vary significantly depending on a number of factors, including:
Size and condition of the barn: The bigger the barn and the poorer its initial condition, the more it’s likely to cost to convert. This can include costs related to structural work, damp treatment, or replacing roofs or floors.
Location: Where the barn is located can influence the cost. For example, barns in remote locations may require additional infrastructure work, like connecting to utilities or building access roads. Also, the cost of labour and materials can vary by region.
Design and Specification: A high-end design with luxury finishes and features will cost more than a simpler, more basic design.
Professional Fees: You’ll likely need to hire various professionals to help with your project, including architects, surveyors, and possibly a project manager. Their fees will depend on their rates and the complexity of your project.
Planning and Building Regulations: Depending on the specifics of your project, you may need to pay for planning permission and building regulation approval and potentially for specialist reports or surveys.
Unforeseen Costs: With any building project, and particularly with barn conversions, there can be unforeseen costs. For example, you might uncover structural issues that need to be fixed, or you might decide to make changes to your plans part-way through the project.
As a very rough estimate, Conversion costs in the UK can range from around £1,000 to £2,000 per square meter. But this is a very general figure, and the actual cost could be lower or higher depending on the factors above.
The length of the application process for a barn conversion mortgage can vary considerably, depending on various factors such as the lender, the complexity of the project, the completeness of your documentation, and whether any issues arise during the process.
Here is a rough timeline for the application process:
Initial consultation and application: This typically involves meeting with a mortgage advisor or broker to discuss your project and financial situation and to complete a mortgage application. This can take a few hours to a few days, depending on how prepared you are with the necessary information and documents.
Mortgage in principle: The lender will review your application and credit history, and if they’re satisfied, they will offer you a Mortgage in Principle. This is a conditional offer that states they’re willing to lend to you, subject to certain conditions being met. This can take anywhere from a few days to a few weeks.
Property valuation and surveys: The lender will need to conduct a valuation of the barn before and after the conversion. This can take a couple of weeks to arrange and carry out. In some cases, further surveys or inspections may be required, which can add more time.
Final approval and offer: Once the lender is satisfied with the valuation and any other checks, they will give final approval for your mortgage and issue a formal mortgage offer. This can take another few days to a week.
So, all in all, you’re looking at a process that could potentially take anywhere from a few weeks to a couple of months. It’s important to factor this timeline into your project planning. In general, it’s a good idea to start the mortgage application process as early as possible so that you have your financing in place when you’re ready to start work on the conversion.
A barn conversion mortgage often uses a stage payment structure, meaning that funds are released in stages as your project progresses rather than providing all the funds at once at the start. This can reduce the risk for the lender and can help you manage your cash flow during the project.
Here’s a general breakdown of how this might work:
Initial advance: This is typically provided when you complete the purchase of the barn. The amount can vary, but it’s usually enough to cover the purchase of the barn and some initial costs.
Interim stages: Further funds are then released at various stages during the project. The exact stages can vary, but they might include when the building is made watertight, when the first fix is complete, and when the second fix is complete.
Final stage: The final payment is usually made when the conversion is fully complete, and the building has been signed off by building control.
Each time you request a stage payment, the lender will usually want a surveyor to visit the site and confirm that the work has been completed to the required standard. This means you’ll need to carefully manage your project to ensure that you’re ready for each stage payment when you need it.
It’s also worth noting that during the conversion project, you’ll typically only pay interest on the funds that have been released so far, not on the full mortgage amount. This can help to keep your costs down during the project.
Once the conversion is complete, you’ll start making full repayments on the mortgage, or you may choose to remortgage to a standard residential mortgage, which could offer a lower interest rate. It’s important to plan for this in advance to ensure that your converted barn will meet the lender’s criteria for a standard mortgage.
Starting a mortgage application, especially for something as unique as a barn conversion, can seem like a daunting process. However, by breaking it down into smaller steps, it becomes more manageable. Here’s how to start:
Get Your Finances in Order: Before you even begin the application process, it’s essential to have a good understanding of your current financial situation. Calculate your income, your monthly expenditure, your existing debt, and how much you have saved for a deposit. This information will be needed in your application.
Prepare Necessary Documentation: You’ll need to provide a variety of documents as part of your mortgage application. These usually include proof of income (like payslips or tax returns), bank statements, proof of identity and address, and details of your outgoings. If you’re self-employed or have a less straightforward income situation, you might need to provide additional documentation.
Project Information: Since a barn conversion mortgage is a specialist type of self-build mortgage, you’ll need to provide detailed information about your planned project. This can include architectural plans, planning permission documents, a detailed budget, and potentially a timeline of the project.
Speak with a Specialist Broker or Lender: Because barn conversion mortgages are less common, it can be helpful to speak with a mortgage broker or lender who specialises in these types of loans. They can help guide you through the process, and they may have access to lenders and mortgage products that you wouldn’t find on the high street.
Application Submission: Once you have all your documents in order, you can submit your application. This is often done with the assistance of your mortgage advisor or broker but can also be done directly with the lender if you’re managing the process yourself.
Await Response: After submission, there will be a period of time where the lender reviews your application, verifies your information, conducts a credit check, and arranges for a valuation of the barn. This can take several weeks.
Every lender will have slightly different requirements, and the process may vary. You’ll need to be patient, as securing a barn conversion mortgage can take time due to the additional complexities involved compared to a standard mortgage. If your application is successful, you’ll be issued with a Mortgage in Principle, which is a provisional agreement to lend you the funds. This is a crucial step that allows you to move forward with your conversion project with confidence.
Applying for a barn conversion mortgage can be more complex than a standard residential mortgage due to the unique nature of the project. However, there are several steps you can take to increase your chances of approval:
Build a strong credit history: Mortgage lenders look closely at your credit history when deciding whether to approve your application. Paying your bills on time, reducing your debt levels, and avoiding any negative marks on your credit report can help to build a strong credit history.
Save for a larger deposit: The more money you can put down as a deposit, the lower the risk to the lender. A larger deposit could also secure a more favourable interest rate.
Prepare a detailed plan: Lenders want to see that you have a thorough and realistic plan for your barn conversion. This should include detailed architectural plans, a comprehensive budget, a timeline for the work, and any necessary planning permissions.
Employ professionals: Demonstrating that you have a professional team on board can reassure lenders that the project will be managed effectively. This could include an architect, a builder with experience in barn conversions, and possibly a project manager.
Maintain stable employment: Lenders prefer borrowers who have stable, reliable income. If you’re planning a career change or anticipate a drop in income, it might be worth waiting until your situation stabilises before applying for a mortgage.
Limit your outgoings: In the months leading up to your mortgage application, try to limit your outgoings as much as possible. This includes avoiding large purchases, as lenders will look at your bank statements to assess your financial management.
Consult a specialist mortgage broker: A mortgage broker who specialises in self-build or barn conversion mortgages can offer valuable advice and help you navigate the application process. They can also help you find the best lenders and mortgage products for your needs.
Insurance: Ensure you have adequate insurance in place for the conversion process, as this may be a requirement from the lender.
Consulting with an expert broker, especially one specialising in barn conversion mortgages, can greatly simplify your mortgage application process. Here’s why:
Access to specialised products: Expert brokers have a broad understanding of the mortgage market and often have access to specialist products and lenders that you might not find on your own.
Understanding of complex situations: Barn conversion mortgages can be complex, and a broker who has experience in this area will be familiar with the unique challenges and requirements of these loans.
Tailored advice: An expert broker can provide advice tailored to your specific circumstances, helping you to find the most suitable mortgage product for your needs.
Assistance with application: The mortgage application process can be complex and time-consuming. A broker can help you with the application, making sure you have all the necessary documentation and that everything is filled out correctly.
Saves Time: Instead of having to research and compare mortgage products yourself, a broker can do this for you, saving you considerable time and effort.
Potential cost saving: By finding the most suitable mortgage product with the best rates, a broker can potentially save you money over the life of the loan.
When looking for a broker, consider their experience, qualifications, and whether they are regulated by the Financial Conduct Authority (FCA). It’s also worth asking about their fees and how they are paid. Some brokers charge a fee for their services, while others are paid commission by the lender. You should also check reviews or ask for recommendations to ensure you find a reputable broker.
Once you find a broker you’re comfortable with, they can guide you through the process of applying for a barn conversion mortgage, helping to make the process as smooth as possible.
Yes, remortgaging your current home is one way to raise funds for a barn conversion. This involves taking out a new mortgage on your existing property, either with your current lender or a new one, to release some of the equity you have in the property. However, it’s important to carefully consider the implications of this. Increasing the size of your mortgage will increase your monthly repayments and, potentially, the term of the mortgage. Always speak to a mortgage advisor before making any decisions.
Securing a barn conversion mortgage as a first-time buyer can be more challenging, but it’s not impossible. Lenders might see you as a higher risk because you have no prior experience of managing a mortgage and the added complexity of overseeing a conversion project. That said, if you can demonstrate that you have a good credit history, sufficient income to cover the mortgage repayments and the costs of the conversion, a solid plan for the conversion project, and possibly some professional help, such as an experienced project manager, then you may be able to secure a barn conversion mortgage.
Yes, some lenders offer green mortgages for projects that are energy efficient or eco-friendly, and this can include barn conversions. The specifics can vary between lenders, but these types of mortgages often provide preferential terms or rates for borrowers who are planning to incorporate sustainable or energy-efficient features into their conversions. Always check the criteria for these mortgages with the lender, as they might require certain energy efficiency standards to be met.
Getting a barn conversion mortgage with a low deposit can be challenging. Most lenders see these types of projects as higher risk, so they typically require a larger deposit – often around 25-40% of the total project cost. However, this can vary between lenders, and some may be willing to accept a lower deposit if you can demonstrate a strong financial position and a solid plan for the conversion. It’s always worth speaking to a mortgage advisor to understand your options.
Before applying for a barn conversion mortgage, it’s generally recommended to get a full structural survey on the barn. This is the most comprehensive type of survey, providing an in-depth analysis of the property’s condition and highlighting any potential issues, such as structural problems or dampness. This information can be crucial in planning your conversion and budgeting for any necessary repairs. In addition, the lender will also require a professional valuation to confirm the value of the property before and after the conversion.
Yes, you can apply for a barn conversion mortgage if you’re self-employed. However, you’ll likely need to provide additional documentation to prove your income. This can include tax returns, business accounts, and bank statements, often for the last two or three years. Lenders will also want to see evidence of ongoing work or contracts to assure them that your income is stable. As with all mortgage applications, having a good credit history and a substantial deposit can also improve your chances of approval.
Getting a barn conversion mortgage on a leasehold property can be challenging, and much will depend on the specifics of the lease. Lenders will consider the length of the lease remaining: generally, it needs to be considerably longer than the mortgage term. If the lease is short, it can significantly reduce the property’s value, making it less appealing as security for the loan. Other lease conditions might also affect your ability to get a mortgage, such as restrictions on making alterations to the property. It’s always advisable to discuss this with a mortgage advisor or broker who can guide you based on your specific situation.
We are a hybrid mortgage broker and protection adviser. However, we want to make it clear that we do not have physical branch offices everywhere in the UK. You can get our services over the phone, online, and face-to-face in some circumstances.
Please keep in mind that while we may not be local to you, we may still assist you. Imagine if you had a long-term health issue that needed to be addressed. Would you rather have the person who is closest to you or the person who is the best? Now is the moment to put that critical thinking to work in your search.
Legal
Count Ready Limited is registered in England and Wales, No: 10283205. Registered Address: Unit 10, Robjohns House, Navigation Road, Chelmsford, England, CM2 6ND.
Count Ready Limited is an Appointed Representative of Connect IFA Limited 441505 which is Authorised and Regulated by the Financial Conduct Authority and is entered on the Financial Services Register (https://register.fca.org.uk/s/) under reference: 976111.
The FCA do not regulate some forms of Business Buy to Let Mortgages and Commercial Mortgages to Limited Companies.
The information contained within this website is subject on the UK regulatory regime and is therefore targeted at consumers based in the UK.
We usually charge fees of £595 on offer, but we will agree to our fees with you before we undertake any chargeable work. We will also be paid by commission from the lender.
Commission disclosure: We are a credit broker and not a lender. We have access to an extensive range of lenders. Once we have assessed your needs, we will recommend a lender(s) that provides suitable products to meet your personal circumstances and requirements, though you are not obliged to take our advice or recommendation. Whichever lender we introduce you to, we will typically receive commission from them after completion of the transaction. The amount of commission we receive will normally be a fixed percentage of the amount you borrow from the lender. Commission paid to us may vary in amount depending on the lender and product. The lenders we work with pay commission at different rates. However, the amount of commission that we receive from a lender does not have an effect on the amount that you pay to that lender under your credit agreement.
Disclaimer: All content on the Count Ready website can only ever provide general information and does not constitute financial advice. For this reason, we always recommend that you speak to authorised advisers for your needs. (Please be aware that by clicking onto any outbound links you are leaving the www.countready.co.uk. Please note that neither Count Ready or Connect IFA are responsible for the accuracy of the information contained within the linked site(s) accessible from this website.)
© Count Ready – 2024. All rights reserved.
