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Fixer Upper Mortgages

Can I get a mortgage on a property that needs fixing up? Get the right advice about this here

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Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: April 26, 2022

Whether you’re a first-time buyer or an experienced investor, getting a fixer-upper property can be a lucrative investment. There is money to be made from flipping properties and taking advantage of price reductions where renovations are required.

The opportunity is certainly there, and the good news is that there are mortgage programmes specially designed to help you borrow the right amount for both purchase and renovation costs, as we explain in detail in this guide to buy to renovate mortgages.

How to get a buy-to-renovate mortgage

There are multiple mortgage options for buying a house that needs work. Some of these products even allow you to take out the full sum of the cash needed for renovations. But before you start looking for your best fixer-upper mortgage, you’ll need to do a few checks on the property to ensure lenders would approve it for a mortgage.

There are some situations in which lenders would consider a property so far in need of repairs that it becomes unmortgageable. The property type may also affect your mortgage application.

Buy-to-renovate mortgage options

Most high street banks and mortgage lenders won’t give you a mortgage if…

  • The property is derelict, i.e. in a very poor condition from neglect.
  • Not considered to be ‘habitable’, i.e. lacking electricity, heating a functioning kitchen and bathroom.
  • The property needs conversion.

However, even if the property does fall into one of these categories, there are some exceptions and alternative financing options that could still get you the mortgage you need. Specialist mortgage brokers will know where to find these hidden deals.

We work with mortgage brokers who can take you to your most suitable fixer-upper mortgage and provider.

Did you know… You could access 30% more of the mortgage market with a broker on your side – Get Started with an OMA-Expert to find out how much this could save you and unlock more deals.

Best mortgages for flipping a house

Fixer-upper mortgages are designed to give you all the finances you need to buy and renovate your property. The best mortgages for flipping a house into your ideal home use the post-renovation property value to determine the size of the mortgage you qualify for.

For example, if the post-renovation property value is £250,000 and the mortgage programme offers a loan based on an 80% ratio of the renovated value of the property, you can take out a £200,000 mortgage.

If you need to get a loan to complete renovation of the property, a fixer-upper mortgage could be right for you, enabling more borrowing than the guidelines for a standard mortgage programme would allow.

Types of mortgages for buy-to-renovate properties

The type of mortgage that’s a match for you will depend on situation-specific factors such as the property itself, your finances, your credit history, whether you are a real estate investor or purchasing property to occupy, and how much renovation is needed.

Fixer-upper mortgage types include…

If you’d like help getting the best mortgage for flipping a house hassle-free, speak to an expert. Make an enquiry and we’ll put you in touch with a specialist fixer-upper mortgage broker.

Construction to permanent mortgages

A construction to permanent mortgage allows you to borrow funds to pay for your construction. Once construction is complete and you move into the property, the lender will convert the loan into a permanent mortgage. This is a mortgage with a two-part loan. It starts out as an interest-only mortgage drawn down in stages which then converts to a regular mortgage when the build is finished.

Construction-only mortgages

An alternative is taking out a construction-only mortgage. It enables you to pay for construction and when you’re ready to move into the property, you are given a second mortgage in which you pay back the construction debt.

The advantage of getting these types of fixer-upper mortgages is that you can save money with a two-in-one deal and remove the extra hassle of applying for a second mortgage to renovate your property.

Renovation mortgages

A renovation mortgage enables the borrower to take out a mortgage size equivalent to the post-renovation property value.

There are providers from both high street and private banks which offer specialist renovation mortgages for both residential and commercial properties in the UK. It’s known as limited cash-out refinance mortgage or a transaction mortgage.

This gives the buyer funds to cover repair and remodelling or renovation costs, or ‘sweat equity.’ The extra finances you take out for renovations are paid off in monthly payments alongside your mortgage. The advantage a renovation mortgage offers is that you can take out a loan big enough to renovate your property at the same low-interest rate of your property’s mortgage.

Did you know… An Online Mortgage Advisor broker has access to more deals than any comparison site. Get Started to unlock more options and increase your chance of mortgage approval.

Conventional mortgages for fixer-upper properties

A conventional loan is a mortgage which will finance the purchase of an owner-occupied home but won’t cover the cost of renovations.

Many mortgage lenders will offer these conventional mortgage products, which can help you get your foot on the property ladder. If you don’t need to take out an additional loan to cover the cost of renovations, this could be the right option for you.

You could also get a conventional mortgage for a fixer-upper and then take out an additional loan for renovations at a later date if your finances restrict getting immediate access to an additional home renovation loan.

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Speak to an expert about fixer-upper mortgages

Whether you are looking for your next home to purchase and repair, or you’re an investor looking for a quick turnaround on investment, speaking to a mortgage broker who specialises in fixer-upper property finance is a fast-track option to getting the best deal.

We offer a free broker-matching service that will assess your needs and circumstances to pair you up with the mortgage advisor who’s best positioned to help you. In this case, you’ll be matched with an expert on fixer-upper mortgages who we’ve personally vetted to ensure they have the right knowledge and expert to get results for customers just like you.

Call us on 0808 189 2301 or make an enquiry so we can introduce you to the ideal expert for you, for free. There’s no obligation and your credit report will not be affected.

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We know everyone's circumstances are different, that's why we work with mortgage brokers who are experts in Fixer Upper Mortgages

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About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

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FCA disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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