Renovation finance unlocked

Thomas McSherry at BuildStore explains how Light Renovation mortgages are helping buyers finance uninhabitable homes and unlock the potential of renovation and retrofit.

Buying a home that’s currently uninhabitable can be an opportunity, but it’s also where many purchases fall down.

When a property can’t be lived in at the point of sale, most high street lenders are unable to support the purchase, regardless of its potential. That leaves buyers struggling to find a way to fund both the purchase and the essential renovation needed to make the home habitable.

Yet this challenge comes at a time when upgrading existing homes has never been more important. Across the UK, millions of properties require renovation or retrofit simply to bring them back into safe, liveable use.
The Government’s Warm Homes Plan, which commits £15bn to upgrading up to five million homes by 2030, underlines the growing need to improve what already exists.

Despite this focus, access to suitable finance at the point of purchase remains one of the biggest barriers for buyers taking on uninhabitable homes.

WHEN STANDARD MORTGAGES DON’T FIT 

With limited options available, many buyers feel pushed towards bridging finance as the only way to move forward. While it can work in some situations, bridging is usually a short-term and expensive option, with the loan repayment typically required within 12 months. This is unsuitable for many projects as the work will take longer
than the loan term offered, which can add unnecessary pressure and uncertainty at an already demanding stage of the project.

A MORE FLEXIBLE OPTION 

Whether you already own your home or are buying a property to renovate, a Light Renovation mortgage is designed to provide a more suitable solution.

Instead of being limited by the home’s current value, borrowing is based on the property’s value once the renovation is complete. This can allow borrowing of up to 80% of the finished value, and in many cases can cover up to 100% of the renovation costs.

Funding is released through guaranteed stage payments, linked to the progress of the work. Crucially, funds can be released before each stage of the works begins, helping you pay builders and suppliers on time and maintain a positive cashflow throughout the project. This reduces reliance on savings or short-term borrowing and makes it easier to plan and manage your renovation with confidence.

WHAT TYPES OF PROJECTS ARE SUITABLE? 

Light Renovation mortgages are designed for work that improves, modernises and futureproofs a home.

To qualify:

  • The property must be wind and watertight at the outset
  • The build period should be no more than 12 months
  • The work must fall under permitted development or Building Regulations, rather than requiring full planning permission

Typical qualifying projects include:

  • Replacement windows and doors
  • New or upgraded heating systems, including boilers and MVHR
  • Roof repairs or replacement of non-structural elements such as tiles, slates, fascias and gutters
  • Rewiring, plastering and internal redecoration
  • New kitchens and bathrooms
  • Loft conversions
  • Insulation upgrades
  • Solar panels and solar thermal systems
  • Removal of internal walls where Building Regulations approval only is required

Projects involving major structural changes or full planning permission may fall outside the Light Renovation criteria, but can still be supported through our major renovation mortgage options, which support projects requiring planning permission.

HOW LIGHT RENOVATION FINANCE WORKS 

Because Light Renovation mortgages are based on your home’s future value, you can borrow more than with a standard mortgage, helping to fund the renovation work without relying heavily on savings or short-term borrowing.

This means:

  • Borrowing reflects the full scope of the renovation
  • Cashflow is available as the project progresses

Key features include:

  • Stage payments are released in line with the build 
  • Flexible payment options, with funds available in advance or in arrears
  • Guaranteed stage payments in advance or arrears
  • One mortgage that can fund both the purchase or remortgage and the renovation works, all under a single facility

DESIGNED TO MAKE RENOVATION SIMPLER

As part of the application, you’ll need to provide details of the work you plan to carry out and the associated costs. This helps ensure the funding is matched to the project and released in line with the build.

Because Light Renovation projects are less complex than major rebuilds, there is a simplified costing process. This means there is less paperwork and a clearer, quicker route to approval, giving you greater confidence when planning and managing your budget.

SUPPORTING WARMER, MORE EFFICIENT HOMES 

As energy efficiency and retrofit move centre stage, access to the right finance will become more important. This type of mortgage is designed to support improvements that make homes warmer and more comfortable, cheaper to run and better suited to modern living.

As the UK moves towards a lower-carbon future, upgrading existing homes will be just as important as building new ones. Having access to the right finance can be the difference between putting plans on hold and turning them into reality.

Thomas McSherry is national business development manager at BuildStore