Barn Conversion Mortgages

Barn conversions can provide some of the most unusual, stunning and spacious homes available, but financing this type of project can be much more difficult than buying a traditional residential home.

In this guide, we’ll explore the important considerations of buying and converting a barn, the types of finance available, and how to secure the loan you need.

Is it possible to get a mortgage for a barn conversion?

It’s absolutely possible; however, there is much more involved than when you purchase a standard residential property. Of course, the type of mortgage you’ll need and the considerations required will depend on whether you’re buying an already converted barn or planning to convert one yourself.

What type of mortgage is needed?

If you’re planning to convert a barn or buy one that’s been converted, there are a few options available to you in terms of financing:

Self-build mortgages

In most cases, the obvious choice will be a self-build mortgage, as they’re designed for this purpose. If you’re planning to implement modern energy-efficient and eco-friendly design aspects and processes during the build, you may even qualify for an eco-self-build mortgage, which offers additional benefits such as preferential rates, cash back, or sometimes a higher level of borrowing.

With this type of mortgage, funds are released in stages, which allows you to keep a tight budget and save money on interest. You only acquire interest on the money that’s been released rather than the full loan amount.

Bridging loans

Another option is to use a bridging loan for the conversion and refinance onto a standard mortgage when the project is complete. This may be useful if you plan to buy the barn at auction, as it can be arranged far more quickly than a mortgage.

It’s important to note that a bridging loan is short-term finance, usually taken over a maximum of 2 years, so it can be a bit more restrictive if delays occur during the build. It’s possible to take the finance in stages, similar to a self-build mortgage. However, the interest rates tend to be higher.

Standard mortgages

If you’re buying an already converted barn or perhaps a partially converted barn that’s habitable, it may be possible to purchase it with a standard mortgage. However, you would need to consider how to fund any further renovations.

As barn conversions are typically classed as non-standard construction properties, most high street lenders would likely shy away from this type of residential purchase; however, plenty of specialist lenders will consider them.

Buy-to-let

Some specialist lenders may be able to provide a self-build buy-to-let mortgage for a barn conversion, but this is a very niche area of lending. Using a bridging loan to secure and convert the property and then refinancing it onto a buy-to-let mortgage with a specialist lender may be a more workable solution. Either way, you will need to use a broker with expertise in this area to secure the finance you need.

How to get a barn conversion mortgage

Converting a barn into your dream home can be incredibly fulfilling. However, the process is not typically straightforward, and sourcing the right finance can be difficult.

The good news is following these 3 simple steps will make the whole process simpler and help you achieve your goals:

1. Speak to a broker that specialises in barn conversion finance

With a home buying/building niche as specialist as this, you’ll need advice right from the outset. A broker with specialist knowledge in this field can do much more than simply find you the right finance for the project. They will know what considerations must be made at every process stage. They can recommend suitable conveyancers and surveyors and even help present your work plan to the lender.

Consulting with one of the expert brokers we work with can save you a multitude of costly and potentially devastating oversights or mistakes. Get in touch today to be paired with the right broker for your needs.

2. Research and planning

Once you’ve taken the relevant advice, ensure you’ve considered all planning requirements and other forms of consent that may be necessary, as well as other pertinent points, such as onward saleability in various areas of the country and what type of financing will be most suited to your needs. Your broker will have discussed these options with you at stage 1.

3. Recruiting the right team

Unless you’re experienced in any of the following areas of barn conversion, it’s essential to ensure that you hire an architect, solicitor and construction company with strong expertise in this field.

Aside from knowing what to look out for and providing the best finish, using experienced professionals and tradespeople will bode well with most lenders and can contribute to getting approval for a self-build mortgage or alternate development finance.

Lender availability and rates

There are very few high street lenders that will accept a self-build mortgage application for a barn conversion, so you’re likely to need to go through a specialist lender. Often, you won’t be able to access this type of lender without an intermediary, so using a broker with knowledge in this area is essential.

Self-build mortgages typically have higher interest rates than traditional mortgages, and even if you’re buying a completed barn conversion, it will be classed as non-standard construction, which also attracts higher rates of interest due to the increased risk of lending on an unusual property.

Eligibility criteria

The criteria you’ll need to meet will vary from lender to lender and depend on the type of finance you need, but the personal criteria, such as affordability and creditworthiness, are consistent with other mortgage types.

When you’re planning to build or buy a barn conversion, however, there are far stricter criteria to meet in terms of the property itself, and you’re likely to need a larger deposit.

Deposit requirement

For a self-build mortgage, you’ll likely need a deposit of around 25%, although some lenders may accept less. It’s sometimes possible to secure bridging finance without needing a deposit, depending on other assets you may have available for security and the strength of your exit strategy.

Barn type and requirements

Whilst a fair number of self-build mortgages are available, those lenders offering them for barn conversions are far fewer.

Even the more specialist lenders that are happy to consider barn conversion often have additional criteria, for example:

• Some lenders won’t accept semi-detached or terraced barn conversions
• Some lenders don’t allow for certain modern barn construction types
• Most lenders will require a barn conversion warranty to be in place when the project is complete

How much can you borrow?

Again, this depends on your objectives and what you can afford to borrow. Suppose you decide that a self-build is the right path for you. In that case, you’ll have to meet typical mortgage affordability criteria. Depending on your income level and profession, you will likely be able to borrow between 4 and 5 times your income.

This affordability calculator will give you an insight into the amount you may be able to borrow based on your household income:

Buying a barn conversion – what does the process involve?

Creating a barn conversion from scratch requires substantial research, and you’ll need to consider the following factors before you even start to think about finding the right lender:

Planning permission

You won’t necessarily need full planning permission to convert a barn into a dwelling, as legislation passed in 2014 sought to simplify this process with the addition of ‘permitted development rights’. However, you’ll need to provide ‘prior notification’ to the local authority concerned before the project begins, and they could reject your proposal.

You may still need planning permission if:

• The plans are extensive enough to be considered a rebuild rather than a conversion
• The barn is listed

Hiring an architect with experience designing barn conversions will equip you with relevant guidance on such matters and increase lender confidence in financing the project.

Other forms of consent

Barns tend to be older buildings on agricultural land and often lack direct vehicle access.

When looking to purchase this type of building for conversion, it’s crucial to consider the following alongside planning permission and prior notification requirements:

• Listed Status: If the barn is a listed building, as well as planning permission, you’ll need to apply for ‘listed building consent’ through the relevant local authority. There will likely be restrictions on the materials you can use in the conversion and a requirement to retain certain original characteristics of the property within the design.
• Agricultural restrictions: It’s very important to ensure that no agricultural restrictions exist on barns and their surrounding plot of land. Whilst it may be possible to have such restrictions removed, it can be a very complex and lengthy process with no guarantee that you’ll get the desired outcome. This can also add substantial costs to the project.
• Deed restrictions: Finding a barn with existing planning permission can save a lot of time and hassle, but it’s important to check for any deed restrictions attached to it. These could include restrictions on extending the property, not being able to build on certain plots, not being able to keep livestock, or even parking utility vehicles, such as boats or caravans.
  Breaching a restrictive covenant is fairly easy without the correct information about the property, but it can be costly and time-consuming to correct. A worst-case scenario could even involve demolishing the conversion.
• Access and right of way: This should also be considered during this phase of planning, as you’ll need to seek permission from the local authority for any additional access needs.

Resalability

Most people take on this project to create their forever home but remember that plans and life can change. If you’re ever in a position where you need to sell a barn conversion, the location and build specification will play a big role.

Some areas of the country have far more demand for this type of property than others, and high-spec properties with modern technology and a quality finish will retain far better resale value. Always do your research!

Surveys

Ensure you set aside funds for a full building survey. This level of report is essential whether you’re building or buying a pre-built barn conversion.

Budgeting

Throughout this type of endeavour, it’s fairly common to encounter unexpected issues and additional expenses. A clearly defined financial plan with a contingency fund will put your mind at rest and convince lenders that you’ve given due consideration to potential pitfalls.

Speak to a broker experienced in barn conversion mortgages

If you’ve set your heart on a barn conversion, don’t be put off by the complexity of the process and sourcing the right finance for your needs. Our broker matching service will connect you with a broker who has the precise experience necessary to help you fulfil your plans successfully and with minimal stress.

The brokers we work with specialise in self-build mortgages and in securing finance for barn conversions specifically, and will ensure you get the loan you need, at the most competitive rates available. Simply reach out to our team on 0330 818 7026 or make an enquiry and we’ll match you with the most relevant expert immediately.