How to Get a Mortgage for a Barn Conversion

A barn conversion is the renovation and alteration of a farm building into a habitable one that can be used for either commercial or residential purposes. Thanks to their rustic exteriors, character and charm, generous proportions, high ceilings and favourable locations, they’re increasingly sought-after properties for residential dwellings or trendy office spaces.

Most mortgage lenders will only offer a mortgage on a property that's considered habitable, with a functional kitchen and bathroom. This eliminates most renovation and non-traditional construction projects, including barn conversions. Non-traditional construction generally covers buildings made from unconventional building materials such as timber frames, metal, glass, concrete and pre-fabricated kit buildings.

Mortgages for barn conversions are different from standard mortgages that release funds in one go and expect the property to be habitable for you to move into when you submit your mortgage application. These types of mortgages can vary considerably depending on the type of project and the extent of the renovations required. If you want to renovate a derelict property or convert a non-residential building, such as a barn, you'll likely need to approach a specialist mortgage lender.

As a barn conversion involves converting a building, rather than moving straight into it, getting a mortgage for a barn conversion is much more complex than applying for a regular mortgage. Lenders want to make sure that the conversion is viable before they agree to lend any money. When applying for a loan to convert a barn, you should consider:

• Whether your conversion project requires planning permission
• If the conversion is subject to any agricultural restrictions
• There is a clear right of way to the building
• Whether it's a listed building
• Costs related to carrying out the project (including unforeseen costs that may arise)

You may find that a self-build barn conversion mortgage is not appropriate for your needs, because of:

• You only require a short-term loan to complete the barn conversion
• You intend to sell the barn conversion soon after it's completed and only need short-term financing
• Your barn conversion doesn't meet the required lending criteria
• You’re purchasing a barn at auction and don't have enough time to secure a mortgage

In these circumstances, you may find an interim bridging loan more advantageous. This is a type of short-term loan that will bridge the gap until you can secure long-term financing such as a mortgage. However, you’ll need to outline an exit strategy from your bridging loan, such as switching to a standard mortgage or selling the barn conversion, once it's complete.

If you’re rebuilding a barn instead of converting it, you’ll probably need to apply for full planning permission. You’ll also need a self-build mortgage rather than a barn conversion loan. Permitted development rights only apply to conversions, not a full rebuild. Your architect should be able to advise you as to whether you require planning permission.

It’s very unlikely that you’ll be able to find a mortgage lender if your barn has any agricultural restrictions. It can take a long time to remove agricultural restrictions and there's also no guarantee that you'll be able to do so. The process is also very expensive. Barns with restrictions are usually best avoided.

It’s very unlikely that you’ll be able to find a mortgage lender if your barn has any agricultural restrictions. It can take a long time to remove agricultural restrictions and there's also no guarantee that you'll be able to do so. The process is also very expensive. Barns with restrictions are usually best avoided.

If you’re rebuilding a barn instead of converting it, you’ll probably need to apply for full planning permission. You’ll also need a self-build mortgage rather than a barn conversion loan. Permitted development rights only apply to conversions, not a full rebuild. Your architect should be able to advise you as to whether you require planning permission.

Specialist lenders also offer non-standard construction mortgages for other types of building conversion, aside from barns. For instance, some lenders will approve finance for the conversion of:

• Redundant pubs
• Churches and chapels
• Derelict barns and cowsheds
• Windmills
• Redundant garages
• Water towers
• Redundant school buildings

In practical terms, these types of mortgages are pretty similar to mortgages for standard construction properties. The main difference is that mortgages on non-standard building renovations, such as barns, are considered higher risk.

Before buying a barn to convert, it's good to check the resale value of similar properties in the area. This will help you determine the potential profit or loss you may experience in the future. This can help you make a more informed decision when applying for a mortgage for a barn conversion.

Location typically has a considerable impact on the demand and value of a barn conversion. Selling your barn conversion will likely be much quicker and easier if:

• There haven't been any major changes to the neighbouring area, such as a new housing development
• The barn conversion is of a high standard
• The property has been well maintained and features modern technology such as heating and lighting

While barn conversions have grown in popularity, they come with a degree of risk for mortgage lenders. If you’re considering purchasing a barn to convert or looking to buy an already completed barn conversion and want to consider your options, get in touch with the John Charcol.

John Charcol has access to a range of specialist mortgage products, including those for barn conversions, and our experienced advisers will be able to help you find the right financing option for you. Get in touch with us today on 0330 433 2927 or submit an online enquiry.