Church Conversion Mortgages

If you love the idea of a home that’s a little out of the ordinary, then converting to a church could be just the challenge and the character you’re looking for. Hundreds of surplus churches have been sold off since the law changed in 1969, allowing them to be offered for alternative uses, with many being converted into houses or apartments.

The process of church conversion can be complex though, so in this article we’ll look at planning permission, church body approval and explain the different options available for financing your renovation project.

Can you get a mortgage to convert a church into a home?

Yes you can. Converting a church is very different of course to just buying a regular house so you won’t be able to get a standard mortgage. A self build mortgage would be the most usual form of finance for this sort of project, but there are other funding options available.

Aside from the fact of it being a church conversion, you’ll need to meet the mortgage lender’s affordability and eligibility requirements to qualify for a loan, so things like your income, credit history and the amount of deposit you’re able to put down will be important.

What does the process involve?

Before you can get as far as thinking about your eligibility, you’ll need to make sure the building itself is eligible for conversion. There are several key parts to this, all of which will need to happen before you can get a mortgage.

• Find yourself a closed church. In addition to searching directly via estate agents, the Church of England closes surplus churches every year and keeps a list of all the churches available to buy or lease in the UK. The Church of Scotland and The Church in Wales also list their properties for sale, including disused churches.
• Get church approval. A church needs to be deconsecrated to be converted into a residential property, and the church body needs to approve its disposal. A plan for this, called a draft pastoral scheme, needs to be drawn up and implemented.
• Get planning permission. Your local authority grants this, and it is vital before you can get a mortgage. Some closed churches are sold with planning permission, but you’ll need to double-check that this covers everything you want to do and won’t need to be renewed.
• Secure listed building consent. Your local authority will also deal with listed building consent, although if your church has Grade 1 status, you will also need approval from English Heritage for your alterations.

What type of mortgages can you use?

The most common way of financing a church conversion is with a self-build mortgage. This type of home loan works similarly to a regular mortgage, but rather than getting all of the money in one go to purchase a property. Capital is released in stages as you work through the project. Many people then remortgage to a repayment mortgage once the build is complete.

Self-build mortgage lenders tend to be more specialised, and your choice may be further limited by any specifics about your building, such as non-standard construction and listed building status. Fortunately, if you use a broker, they will be able to factor in all of these potential issues and find you the best deals.

If a self-build mortgage doesn’t work for you, there may be other ways to finance your church conversion, such as remortgaging to release equity from another property you own. A bridging loan could also be suitable in some circumstances, usually if you are planning to sell your current home once the conversion is complete or if you’re converting to resell. Bridging loans isn’t a cheap form of finance, so talk to a broker about realistic costs before you commit.

If you’re converting the church for commercial purposes, perhaps to let out as apartments or office or studio space, you may be eligible for a commercial mortgage or development finance.

How a broker can help with a church mortgage

Financing a church conversion isn’t simply a case of picking a standard mortgage and getting started. It’s a very niche project, and the lending criteria can be complex. It can feel daunting trying to work out which finance option is best for you, but don’t worry—this is where a broker comes in.

The brokers we work with can look at your wider financial circumstances and the specifics of your church conversion and guide you to the best lenders for you, often niche lenders that might be harder to find by yourself. They’ll be able to negotiate on your behalf to get the most competitive rates and make sure that you’re on top of all the documentation you’ll need to have to get your finances in place.

Fill out our quick online form, and we can match you, free of charge, with a broker with the right experience.

What are the lender requirements?

Self-build mortgages are typically offered through specialist lenders, and because of the higher risk involved, you should expect to pay higher rates on a self-build mortgage for a church conversion than a standard mortgage. Deposits are also higher, with most lenders looking for a minimum of 20%. If the deposit makes it impossible for you, then the government’s Help to Build equity loan scheme could be something to consider.

Halifax, for example, currently has two self-build mortgage products, one for movers and one for first-time buyers. In both cases, it will only lend up to 75% of the final valuation, and the initial interest rate is 5.91%.

The Ecology Building Society, which specialises in mortgages for unique conversion projects, currently offers a standard variable rate of 4.65%. You can borrow up to 80% of the property’s value on a repayment basis or up to 75% interest-only.

In addition to having things like planning permission and church approval in place, as already discussed, some lenders may also require you to have development experience. Hence, they feel confident you can complete the project. However, this isn’t a deal breaker, and a broker can help work around this if required.

Things to consider

Converting a church is going to be much trickier than if you were buying a standard home or even if you were embarking on a more traditional self-build project. So, it’s important to think through all the potential pitfalls before you start so that you can factor them into your budget and timelines.

Structural issues

It’s worth getting a surveyor who has experience in church conversions to assess the project before you start. Churches are normally very old buildings, often with additions or extensions from later periods, so age and construction may vary throughout the property. If the church has been empty for a significant time, this may also have compromised the structure.

Planning and insurance costs

Be sure to budget not just for costs that you could incur during the conversion process, such as planning permissions and specialist surveyors, but also for higher costs once you’re living in your home. Buildings insurance could well be higher for a non-standard construction home, and heating costs are likely to be high in a church conversion, too.

Restrictive covenants and right of access

If your church has a graveyard attached, make sure you check what rights relatives have to access the graves; otherwise, you may suddenly find a lot of strangers in your garden! You may also be restricted as to what changes you can make to the outside of the church and the facade.

Get matched with a broker experienced in church financing

It’s a good idea to talk to a broker who specialises in church conversion finance before you start the process so that they can advise you on the best option for you and how best to proceed. Without a broker you could waste valuable time and money, where an expert could take you straight to the best lenders.

Give us a call now at 0330 818 7026 or make a quick online enquiry, and we’ll ask you a few questions about your situation and match you with the most relevant broker. All of the brokers we work with have been thoroughly vetted, so you can get in touch with total confidence. Our matching service is free of charge, and there’s no obligation, so you’ve got nothing to lose.