Listed Building Mortgages Explained

If you hope to buy an architecturally significant property to be your home and it’s deemed historically important, such as old churches, former windmills, once-working mills, thatched-roof houses, or converted lighthouses, it could be a listed building.

From a mortgage perspective, these properties fall into the category of ‘non-standard’. However, most lenders will assess applications on a case-by-case basis, so with a good broker in place and our guide to help explain the process, you can be much more well-informed from the start.

Can you get a mortgage on a listed building?

Yes! It is certainly possible to get a mortgage on a listed building, albeit it’s going to be slightly different than if you were looking at financing a modern-day standard home. Banks will look more closely at your circumstances, most likely requiring a report from a professional valuation and attempting to ascertain whether the property is marketable, should they need to repossess their home and recoup their money.

While each lender will consider the risk element, make their judgement, and offer accordingly, with the help of an experienced broker to strengthen your application and discuss your options, there is always a chance you will be successful.

Lending criteria for these properties

Most lenders are open to offering mortgages for listed buildings and have steps to allow it to happen.

However, don’t be surprised if they mitigate the risk to their investment in your property by having a cap on the loan-to-value ratio, having stricter affordability criteria to allow for the fact a listed building is typically more expensive to maintain or repair, and demanding that any necessary renovation work is carried out on completion.

They could also have maximum mortgage term limits, such as 20 or 25 years, as is the case with Dudley Building Society, for example, and they may be very strict about finding out whether the property is marketable.

More than 90% of the UK’s listed buildings are thought to be Grade II listed. The next most common is Grade II*, followed by the least common Grade I, for which there are far fewer obliging lenders. Therefore, it’s most likely that the home you’re hoping to buy is Grade II.

Grade I

Grade l is the top level and is classed as “buildings of exceptional interest.” Often, these properties require the most care. For this reason, most lenders do not consider grade 1 listed property due to potential issues with the ageing structure and its habitability or saleability.

Several mortgage lenders are happy to lend on grade 1 listed property.

Grade II*

Grade II* is the next level and slightly more common, categorised as “buildings of particular importance, of more than special interest.” These properties are considered more mortgageable than grade 1.

Grade II

The good news is that because there are so many Grade II listed buildings, mortgaging them is not overly rare, so lenders have formulated criteria and expertise for assessing their applications.

It’s more than likely that banks and building societies will require this type of application to be referred for manual underwriting and make their mind up from there. This is because many different variations of properties fall within the listed category. For example, you could be looking at a flat in a listed building that requires a collective responsibility for the whole building’s maintenance, or the building could have a timber frame, or there is extensive disrepair.

Whatever the scenario, most lenders will probably only extend up to an 80% loan-to-value ratio, so you will need at least a 20% deposit on the cost of the building. They will also consider the state of the property and want to see a valuation report.

How a broker can help with your mortgage for a listed building

An independent mortgage advisor is an invaluable asset for complex applications. Those who specialise in particular areas of home financing, like the ones we work with, understand the market, what lenders are looking for, and where their limits lie.

Putting together an application for a listed building mortgage can be daunting because of additional challenges, such as reports to submit, restrictions to overcome, statuses to prove, not to mention all of the usual eligibility factors to overcome.

An experienced broker will review your application to make it as attractive as possible. If you contact us, we’ll arrange for a specialist in this lending area to contact you directly.

Which lenders offer mortgages for listed buildings?

Most in the market will at least consider it, especially for Grade II listed buildings. How willing they are to see past obstacles or restrictions is unclear. However, lenders such as Halifax, Nationwide, Generation Home, Barclays, Pepper Money and Accord Mortgages will look at each application on a case-by-case basis. Their decision will also be subject to a valuer’s report.

Due to the potential number of lenders involved – each with their terms and criteria – the wise move here is to first speak with a broker who can review which one to approach that best suits your specific needs.

What type of insurance will you need?

It’s likely that you will need a specialist policy to reflect the type of building you’re borrowing on, so make sure you look into this before submitting your application. Some lenders will need reassurance that your listed property is insurable before they approve your mortgage.

This type of insurance tends to be more expensive than is standard, so some lenders might even look at the cost of this as part of your affordability criteria in case you’ll be paying very high premiums. For example, NatWest and Marsden Building Society specify that they would need suitable building insurance and proof that the insurer is aware that it’s on a listed building.

Get matched with a broker who specialises in listed buildings

We work with specialist listed building brokers who are experienced and experts in their field. They understand the rules and regulations. They also know which lenders offer the best deals on such properties and how flexible each one might be.

If you’re considering getting a mortgage on a listed building but don’t know where to start, our five-star-rated partners are happy to discuss your situation with you. Call us on 0330 818 7026 or make an online enquiry today for a free initial consultation.