BuildLoan has introduced a Light Renovation range aimed at properties that need non-structural work but do not currently qualify for a standard mortgage.
Homes without a working kitchen or bathroom, for example, are often classed as uninhabitable by lenders and therefore unmortgageable. The firm says the new products aim to provide funding in these situations while avoiding the higher costs typically associated with short-term lending.
The renovation finance provider designed the range to sit between residential mortgages, bridging finance and larger-scale renovation loans. It targets borrowers carrying out lighter improvement works and offers a simplified application process with lower fees.
According to BuildLoan, the light renovation segment has received limited attention despite clear demand from homeowners and investors. Many existing renovation finance products focus on significant structural works, which can make it difficult for borrowers to secure funding for smaller projects that still leave a property unsuitable for standard mortgage lending.
The products allow borrowers to:
borrow up to 85% of the property purchase price or current value
fund up to 100% of renovation costs
access staged payments to cover the works
BuildLoan releases renovation funds in stages. Borrowers can choose to receive funds in advance of each phase of work or after completing a stage.
The lender’s professional build cost assessment determines the staged payments based on the actual cost of the works rather than the property’s value. The company says this approach reduces the risk that a down valuation could disrupt stage payments and delay a project.
To qualify for the Light Renovation range, properties must already be wind and watertight. The planned work must also fall within permitted development rules, with no requirement for planning permission.
Projects covered by the range include:
loft conversions
kitchen and bathroom replacements
electrical rewiring
heating system installation
BuildLoan developed the range with several partner lenders, including Stafford Building Society through Stafford for Intermediaries, Chorley Building Society and Furness Building Society.
"Typically, if a client’s property is uninhabitable and they can’t secure a standard residential mortgage, brokers default to bridging," explained head of product development and lender relationships, Chris Martin. "But bridging loans can be costly with high fees and interest rates and short repayment terms."
"Thanks to this new Light Renovation range, we can provide a safer, more affordable alternative to plug this gap in the market and help clients opt for redevelopment projects that can be both financially lucrative and environmentally friendly. And because of the streamlined application process and reduced fees, the range makes it easy for clients to buy, remortgage and renovate ‘doer-upper’ properties."
He added, "With over 20 years of stage payment expertise, we are a specialist in homebuilding finance solutions and we are uniquely positioned to lead innovation within the renovation finance space. We are particularly proud of this range of revolutionary products. This is a major development for the intermediary mortgage market, providing brokers with a range of go-to funding solutions for uninhabitable properties."
