Many people have dreamt of moving to the countryside and converting a barn into a forever home. And while planning restrictions have long been a cause for concern, the good news is that most barn conversions fall under permitted developments in the UK, and this means you may not need to submit a full planning application. However, even with this concern addressed, you may be wondering how you can raise funds for such a project.
In this in-depth guide, we intend to cover this topic in detail.
Can You Get a Mortgage for a Barn Conversion?
Yes, a number of lenders will give you mortgages for barn conversions. However, since this is still considered a niche type of finance, it is essential that you do your research to find a good mortgage provider with the right products to suit your needs. Unlike regular residential mortgages, mortgages for barn conversions are assessed on a case-by-case basis. What is key for the lender is to ascertain that the conversion is in fact viable.
What You Should Take into Account Before Taking Out a Mortgage
The first thing you need to consider before taking out a mortgage is the planning permission required. As we’ve already mentioned, you will not necessarily need the full planning application for a barn conversion; this type of project qualifies for Class Q permitted development rights. All you will need to do is submit a Prior Approval application to show that the council is fully accepting of the proposal. The purpose of this approval is for the local authorities to consider the potential impacts on transport and highways, as well as noise and contamination.
For these conversions, both a structural and full building survey will be considered essential. The survey will be most useful in older barns or those that seem to be in poor condition from the onset. You can consult a chartered surveyor before moving forward with the conversion.
You will also need building regulation approval before you take out a mortgage for your barn conversion. For this process, you will have to work with a fully qualified architect and registered structural engineer.
Another thing you should consider is whether you will have appropriate access and right of way on the property. Your architect will help you determine whether there are any additional access requirements when they review the boundaries.
Since the construction may take some time, you may need to seek alternative living arrangements to tide you over until the project is completed.
Before any mortgage lender approves the loan, they will need to see a detailed budget for the project. This budget may be referred to as the schedule of works, and will usually include a reserve for any unseen expenses.
What Are the Alternatives to a Barn Conversion Mortgage?
Self-build mortgages are usually great for construction projects as the payments will be released in stages. This will help you budget sufficiently and can help you keep up with progress within the construction project. This type of loan is usually released in five key stages of the building process. These include:
- Buying the barn or the land
- Renovating the structure
- Completing the eaves height
- Setting up a watertight roof
- Working on the internal fixtures and fittings
There are a few cases where self-build mortgages may not be the right option. For example, if you are buying the barn through an auction and need to complete the purchase within 28 days, you may not have the time for a mortgage to be processed. Also, people who intend to sell the property once it is completed may find self-build mortgages less appealing. Ideally, they would go for a short-term finance option.
You should also note that there is a level of work that will not qualify for a self-build mortgage, and the interest rates for a self-build mortgage are typically higher than the standard house mortgage or remortgage rates.
If a self-build mortgage doesn’t appeal to you for any of these reasons, you can consider obtaining a bridging loan. These are short-term and interest-only mortgages that help to fund projects when time is of the essence. The loans are usually quicker to arrange than traditional mortgages and secured loans, but you should remember that the interest rates can be very high.
To qualify for a bridging loan, you will have to provide evidence of a strong exit strategy. You also have to convince the lender that the project will pay out in the expected time. Your exit strategy could either be to sell the property or refinance the debt to a residential mortgage.
Bridging loans are usually offered for a maximum of 12 months, although some lenders can stretch the period to 36 months.
Another alternative to mortgages for barn conversions is development finance. These loans are also short-term and interest-only, however, unlike bridging loans, they are paid out in staged drawdowns as the project progresses. Also, most lenders will carry out re-inspections of the projects before they send out the next instalment of capital. This is done to ensure that the conversion is progressing according to plan.
Again, you will need to provide evidence of a viable exit strategy in order to obtain a development finance loan.
Can You Get a Mortgage for a Barn Conversion on a Listed Building?
You can get a mortgage for a barn conversion on a listed building, but you will have to follow a few important steps to get approval for the project. Listed buildings are simply those that are included in a list of protected buildings by the national heritage authority.
Before you start the conversion, you will have to submit a listed building consent application with the relevant local authority. You should send out this application along with planning permission or prior notification. The listed building consent application should be sent out along with detailed drawings that outline the work which you are looking to carry out.
You should note that certain rules apply when carrying out a barn conversion on a listed building. The local authority may want you to use specific materials and specialist workers to maintain the quality of the building. This can end up raising the cost of the conversion. The good thing here is that the building will be highly valuable once the conversion is completed.
What Type of Mortgage Will I need for a Barn Conversion?
You can either obtain a residential mortgage or a self-build mortgage for your barn conversion. In most cases, self-build mortgages will be more suitable as you may need to complete the construction from the ground up. You will usually find that the value of the house is higher than the cost of the loan. Note that self-build mortgages are released in steps, so you will be able to budget properly.
An issue with self-build mortgages is that they usually require higher deposits compared to residential mortgages. You should also note that lots of lenders don’t offer self-build mortgages, and that can make it necessary to work with a broker.
If the barn is habitable or is currently housing people, you will qualify for a residential mortgage. You should note that residential mortgages for barn conversions are not very easy to get as lots of lenders prefer traditional build materials.
If you are able to obtain a residential mortgage, you may be able to pay very low deposits, and this can go as low as 5%. Another advantage of mortgages for barn conversions is that it involves very little paperwork.
Will a Barn Conversion Warranty Help with a Mortgage?
A barn conversion warranty will help to protect against certain defects that may occur in the structure of the property. It is important to note that the major structural defects can be very expensive to fix, and a warranty can come in handy in such situations.
Since the conversion is meant to be used for residential purposes, most mortgage lenders will require you to have a barn conversion warranty. This will ensure that the mortgage provider is protected sufficiently in case a defect arises in the project.
To make it easier for the mortgage provider to process the loan, you should consider working with an A-rated warranty provider. These providers have financial strength and are extremely unlikely to go under. Unrated warranty providers may liquidate and leave you without a valid warranty.
It is also essential to go through the terms of the warranty carefully, as certain companies may stipulate unfavourable requirements.
Converting a barn into residential property can be an exciting venture, but you will need to get the necessary funding to complete the project. To do this, you can apply for a mortgage for a barn conversion, and this could be in the form of a residential mortgage or a self-build mortgage.
Residential mortgages will be suitable for barns that are classed as habitable. On the other hand, self-build mortgages will be ideal for people who intend to sell the property or get a residential mortgage once the project is complete.
To qualify for a mortgage, you will need to have the necessary permits in place and apply for a barn conversion warranty. You will also need to draft a budget, as this will be used to process the mortgage. Make sure you include extra funds in the budget, to accommodate unforeseen expenses.
Why Choose Buildsafe?
Our experts have over 40 years’ of experience in the property sector so you can be assured that we will handle your project with the expertise and care that has been successfully developed over this time.
We take away that pain by managing the process for you and ensuring you receive the best price and the most appropriate cover to meet your requirements whilst having an easy to reach team of experts on hand at all times. Do not hesitate to get in contact with us.