Can I get a buy to renovate mortgage in the UK?

In the UK, individuals looking to purchase and renovate properties have several financing options available, tailored to different types of property investments and personal circumstances. These options cater to both buy-to-let investors and residential homeowners, each with specific terms and requirements. Here’s an overview of how you can finance your property renovation through various mortgage products.

Buy-to-Let Renovation Mortgages

For those interested in the buy-to-let market, renovation mortgages are designed to facilitate property purchases that require updates or complete refurbishments. These mortgages typically offer:

• 70% In and 70% Out Retention: This means that the mortgage can cover up to 70% of the purchase price, and after renovations are completed and revalued by a valuer, further funds can be released, up to 70% of the new, post-renovation value. This second release of funds, often termed as an “additional advance,” is contingent upon the property’s reassessment by a valuer, ensuring that the renovations have enhanced the property’s value sufficiently.
• Process: Initially, the borrower funds the renovation up to a certain percentage of the property value. Upon completion, a second valuation ensures the work has been completed to a satisfactory standard, potentially increasing the property’s value and allowing further funds to be drawn down to match this new valuation.

Residential Renovation Mortgages

For residential customers, including homeowners who wish to renovate their existing homes or are purchasing a property that requires renovation:

• Further Advances: If the existing lender offers it, homeowners can take a further advance on their current mortgage. This option allows them to borrow additional funds against the increased equity in their home after renovations, without needing to remortgage entirely.
• Remortgaging: If a further advance isn’t available or suitable, homeowners might consider remortgaging to a new lender who can provide a larger loan that covers both the original mortgage balance and additional funds for renovations.
• Purchasing and Renovating: For homeowners purchasing a property, the home must be habitable to qualify for a standard residential mortgage. Properties that aren’t habitable typically can’t be financed through traditional mortgages but may be eligible for self-build mortgages or bridging loans: Self-Build Mortgages: These are designed for buying and renovating properties and can provide funds for both purchase and renovation, disbursed in stages as the renovation progresses. Bridging Loans: A bridging loan is a short-term solution for borrowers needing quick financing. It is suitable for buying properties that require significant renovations before they become habitable. Bridging loans are particularly useful if the property’s condition prevents securing a standard mortgage at the time of purchase.