With a barn conversion, the first stage of works often results in the property being devalued because of removal or repairs to the roof, windows and remedial work to the superstructure.
Clients looking for a conversion mortgage ?
The first thing that is likely to happen with this type of property is that it will be stripped back. It was never built to be lived in. Your clients will probably need to remove the roof, some or all of the walls and they may also need to dig down to put in more comprehensive foundations to hold the new structure.
This type of property fits the parameters of a self build mortgage. However, traditional self build mortgages – those you would typically get by going direct to a lender – release funds in arrears, and those stage payments are linked to interim valuations throughout the build. There is a significant possibility that a barn conversion will actually reduce in value before it increases in value.
If the stage releases are in arrears, your clients will need to pay 100% of each stage from their own resources, before the lender inspects it. Assuming the property value has gone up enough, the lender will typically reimburse them a maximum of 75% of the value, at that time. But, if it’s linked to an interim valuation, there’s a high likelihood that the property’s value either drops or remains the same, or doesn’t increase by the value of the money spent on it.
With BuildLoan, you get more money for your clients during the construction period – up to 95% on land/property and up to 95% on build costs. We also offer cost based mortgages with guaranteed stage payments either before or after each stage of works – regardless of lender valuations.
- Clients can borrow up to 95% of the current value of the existing home plus up to 95% of the cost of the improvement works
- Cost Based Mortgages removes any risks of down valuation by directly linking stage releases to the cost of the work. Payments guaranteed irrespective of lender valuations
- Advance Stage Payments funds can be released before each stage of the project
- More Money higher loan to cost lending limits – typically 80/85% but potentially 95%. More money released earlier enabling the project to happen
- Tailored Cashflow stage releases matched to individual project and financial circumstances
Clients Renovating to Sell or Let?
Suppose your clients plan to sell or let the property after the improvement works are complete. In that case, BuildLoan can provide a competitive short term secured development loan or bridging loan to fund the necessary works. On completion of the works, your client repays the loan by refinancing or selling the property.