Renovation mortgages

A renovation mortgage is a loan used to buy or refinance a home that needs work, where the lender takes the planned improvements into account. Some are standard residential mortgages on a home that is habitable but dated, while others release extra money in stages as the renovation is completed and checked by the valuer.

The term covers modernising a kitchen and bathroom, rewiring and replumbing, extensions, loft and basement conversions, and energy improvements such as insulation and heat pumps. Each brings different questions for a lender, mainly whether the home can be lived in during the work and how much the work will add to its value.

Renovation mortgages are residential lending where the borrower will live in the home, so the usual affordability checks apply alongside the lender's view of the project.

There are several ways to fund a renovation. A standard mortgage works where the home is habitable and the buyer pays for works from savings. A mortgage with staged releases adds funds as the work is done. A further advance or remortgage releases equity from a home already owned, and short-term bridging covers homes that cannot be mortgaged yet.

Unsecured loans can fund smaller works, though they are limited in size and usually cost more than secured borrowing. Some lenders offer green or energy-efficiency products that fund improvements such as insulation, solar panels or a heat pump.

Where the home is in poor condition, the order matters: short-term finance to buy and repair, then a mortgage on the finished home. How that route works is explained on the unmortgageable property page.

Lenders check the borrower's income and outgoings, the current value of the home, the cost of the planned works and the expected value once they are done. A schedule of works with quotes from builders, and sometimes plans from an architect or surveyor, helps the lender see that the budget and the finished value are realistic.

Where funds are released in stages, the valuer inspects the work before each release, so a delay in sign-off can hold up the next payment. Lenders also check planning permission and building regulations approval where the work needs them.

A contingency in the budget helps absorb overruns, which are common on older homes where problems appear once walls and floors are opened up.

Extensions, loft conversions and basement conversions are among the most common reasons to borrow for a renovation. Many are funded by a further advance or remortgage on a home already owned, with the lender basing the loan on the current value and sometimes on the value once the work is complete.

Some extensions and loft conversions fall within permitted development rights, while others need full planning permission, and almost all need building regulations approval (Planning Portal, accessed 20 Oct 2026). Basement conversions in terraced or semi-detached homes can also need a party wall agreement with the neighbours.

Lenders want to see that the work is properly approved, because unapproved work can make a home harder to sell or remortgage later.

Comparing renovation mortgage options starts with the condition of the home and the size of the works. A habitable home with modest works may suit a standard mortgage and savings, while a larger project may suit staged releases or a further advance, and a home that cannot be lived in usually needs short-term finance first.

The total cost includes the rate, arrangement and valuation fees, any fees for each stage inspection, and the cost of short-term finance where it is used. Lenders that fund renovation and refurbishment are compared on the refurbishment finance lenders page.