Renovation Mortgages
Buy to Let Renovation Mortgage
With buy to let refurbishment mortgages, there are three options that investors use, depending on perception of risk and speed required.
- Buy to Let Renovation Mortgage: available for up to 70% of the purchase price, borrowers will fund their own renovation and will then get a re-inspection from the same valuer, after renovation. Once the valuer has confirmed the new valuation the lender will arrange an additional draw down to top your mortgage up to 70% of the new valuation, which will be subject to the same rates as the initial loan.
- Bridging Loan: bridging loans are available for borrowers renovating properties, it will be a short term loan of up to between 1-24 months that will contribute up to 90% towards the purchase of the property, or up to 100% LTV with additional security. Most bridging loans are competitive in interest rates where the gearing is 75%LTV.
- Development Loan: available for borrowers looking to renovate a property, usually where the renovation is more leaning towards medium-heavy as opposed to a light renovation. Borrowers can achieve up to 75% of the properties value and 100% of the construction costs. This product does not require experience and can be used for the entry of a buy refurb and refinance (BRR) – suitable for borrowers looking for a BRR loan. Development loans can also be suitable for flips, otherwise known to borrowers as fix and flip loans, or a bridging loan to flip property.
Home renovation mortgage
There are generally two ways in which we are able to achieve funding for borrowers to renovation their home, which could mean the property is not habitable to begin with.
- Self Build Mortgage: Offering up to 80% of the properties end value, borrowers are able to get medium term funding options to purchase and renovate their home. With Self Build mortgages, they don’t just need to be used to build a new home, they can also be applied to renovations too. The process will rely primarily on the valuation of the property, whilst considering the renovation costs and most importantly the predicted end value of the property.
- Renovation Mortgage: pretty similar to the self build mortgage option, lenders do also have separate products for renovation mortgages, with similar terms as above, for up to 80% of the properties end value.
- Regulated Bridging Loan: Regulated bridging options are available for up to 75% of the properties value, borrowers are also able to use additional security to increase the loan beyond 75% of the purchase price, we can potentially get over 100% of the purchase price and more when additional properties are available to secure against.
Commercial renovation mortgage
Commercial renovation mortgages are available to borrowers looking to purchase and renovate a commercial building, this could be to split into smaller units or to fund the renovation of a business premises.
- Bridging Loans: a secure short term loan, providing up to 75% of the properties value. This product can be used to buy properties fast to split, renovate or even for a change-of-use planning application.
- Business Loans: Business loans can be a quick way for a profitable business to obtain funding to renovate their premises, without security this can speed up the underwriting process and deliver speed on your renovation.
Renovation Mortgage insights
- Buy to let mortgage for property renovation
- Buy renovate and sell mortgage
- Mortgage for house renovation
- Halifax renovation mortgage
- Renovation mortgage rates
- Bridging loan to flip property
- Loans for flipping houses
- Bank loans for flipping houses
QUESTIONS ON RENOVATION MORTGAGES
A renovation mortgage allows you to finance the purchase of a property along with the costs of renovations.
You can typically borrow up to 80% of the property’s value, depending on the lender.
Yes, many lenders offer products specifically designed for uninhabitable properties.
Lenders will assess both the current value and the projected value after renovations are complete.
Interest rates vary but generally range from 3% to 6%, depending on lender risk and terms.
A buy-to-let renovation mortgage allows you to purchase a rental property and fund renovations to enhance its rental value.
The GDV is the estimated value of the property post-renovation, crucial for determining your loan amount and any potential top-up.
Yes, many investors refinance to access increased equity following renovations.
Risks include market fluctuations, potential void periods between tenants, and unforeseen renovation costs.
The timeline varies, but some lenders can provide access to funds within a few weeks.
Common fees include arrangement fees, valuation fees, and possibly exit fees.
You’ll need to cover any additional costs yourself, as most lenders will only finance the originally agreed amount.
Providing detailed renovation plans, a solid budget, and proof of income can strengthen your application.
Yes, but additional permissions may be required, and not all lenders may finance such projects.
Delays may affect your ability to refinance or access additional funds, depending on lender terms.
Communicate with your lender and contractors; they may offer solutions or adjustments to your loan terms.
You should consult your lender, as using the funds for other purposes could breach your mortgage agreement.
Beyond construction costs, factor in permits, inspections, and contingency funds for unexpected expenses.
Renovation mortgages can enhance property value, increase rental income potential, and provide a solid investment return.
While there are typically no strict timelines, lenders may expect progress updates at set intervals.
You can borrow money for both buying a home and completing necessary renovations, all bundled into a single mortgage.
Renovations that improve property value, such as extensions, modernisation, and structural repairs, are generally covered.
You’ll typically need proof of income, credit history, detailed renovation plans, and contractor estimates.
Funds are often disbursed in stages based on completed work milestones, typically assessed by a surveyor.
Yes, you may be able to refinance your mortgage to include renovation costs.
You can generally borrow up to 70% of the purchase price, plus 70% of the gross development value (GDV) after renovations.
Cosmetic upgrades, structural changes, and improvements that increase rental appeal are usually permitted.
Similar to a regular renovation mortgage, you’ll need income proof, credit history, and renovation plans.
Yes, lenders may have criteria regarding tenant demographics and rental income levels.
Yes, renovation mortgages can be an excellent option for auction purchases, provided you have a solid plan for renovations.
Yes, many lenders specialise in financing properties that require significant work.
Some lenders may require a personal guarantee, especially for higher-risk projects.
Most residential properties qualify, but check with lenders for specific restrictions.
Like any mortgage, a renovation mortgage may impact your credit score based on your payment history.
Yes, many lenders offer renovation mortgages that cater specifically to self-build projects.
Yes, some lenders allow extensions based on your project’s progress and circumstances.
Compare lenders, interest rates, and terms; consider consulting a mortgage advisor for personalised advice.
Yes, renovation mortgages are designed to cover both aspects in one loan agreement.
Absolutely, many homeowners utilise renovation mortgages to create their ideal living space.
Thorough planning, hiring reliable contractors, and maintaining open communication with your lender are key to success.