How to finance converting a barn into your dream home
We know that turning a barn into your dream home is the ultimate goal for lots of our clients. A barn conversion means you can get the charm and character of an often historic building, paired with the opportunity to design and live in a completely unique space. But whilst the idea of this is exciting, it can be a difficult journey to understand how to go about financing your project.
A barn conversion mortgage works differently to standard mortgages, and the financing process can be different depending on whether you’re buying a barn to convert or if you already own one that you want to renovate. So understanding your options early on can make your process much smoother.
We’re ready to breakdown everything you need to know about financing your barn conversion. But if you’d rather chat through your options with an expert? You can visit our Barn Conversion Mortgage page or book a free call with our team.
Can you get a mortgage for a barn conversion?
Yes, but not with a standard mortgage. Because a barn conversion involves transforming a non-residential building into a home, lenders see it as a riskier project. So instead, you’ll need a specialist Barn Conversion Mortgage. This works similarly to a Self Build Mortgage by releasing funds in stages as the work progresses.
If the barn hasn’t been converted yet, or if it doesn’t have full planning permission for residential use, then traditional lenders won’t approve a mortgage for it. That’s why it’s so important to secure the right type of financing for your conversion.
Before approving a Barn Conversion Mortgage, lenders will usually consider:
If you have planning permission to convert the barn into a residential home
If you have a detailed project plan, that includes budget breakdowns and timelines
Is the barn’s structurally sound, or if lots of structural work will be required
If you have enough savings to cover a deposit and contingency fund?
Because barn conversions can be seen as higher risk projects, many high street lenders won’t offer standard mortgages for them. Instead, you’ll need to apply for a specialist barn conversion mortgage through lenders who have experience financing renovation projects. Like us!
How do Barn Conversion Mortgages work?
A Barn Conversion Mortgage is specifically created to fund where an agricultural or commercial barn is to be turned into a residential home. The mortgage is different to that of a traditional home because:
Funds are released in stages rather than as a lump sum all at the start. This helps lenders to manage the risk and makes sure you have money available for each stage of your project.
Lenders assess the project’s viability. This means looking at the estimated property value once the conversion is finished, to make sure you’ll get your money back.
You may need a larger deposit than you would for a traditional mortgage. This can typically be between 20% and 25% of the project’s total cost.
To better explain how Barn Conversion Mortgages work, we often break down the barn conversion into three stages. These are:
Stage 1: Buying the barn (if you don’t already own it). If you’re purchasing a barn to convert, you’ll need a specialist mortgage to cover the barn cost.
Stage 2: Funding the conversion. Once the build begins, the mortgage funds will be released in stages. These could be:
After planning approval and initial site preparation.
When structural work is complete (e.g., roof, walls, foundations).
When internal fittings, insulation, and utilities are installed.
The final stage when the project is signed off as habitable.
Stage 3: Switching to a standard mortgage. Once the conversion is complete, you can often remortgage onto a standard residential mortgage with better interest rates.
How does funding a barn conversion work?
Barn conversion mortgages release funds at different stages of the project. This is to protect your lender in case something goes wrong during the build. Your stages could look something like:
Initial land or property purchase: If you’re buying an unconverted barn, your first funding stage covers this cost.
Early groundwork and structural work: Funds are released once planning permission is secured and work begins.
Mid-stage construction: This includes roofing, external walls, and insulation.
Final stages: Internal work like plumbing and electrics.
Each stage typically requires an inspection by the lender before the next funds are released. Because of this, it’s important to have a detailed project plan and budget in place.
How much deposit do you need for a Barn Conversion Mortgage?
Often lenders will require a deposit of at least 25 to 20% of your overall project cost. If the barn’s in a poor condition, or if you’re planning a more complex renovation, then you could be asked for even more.
Alternatively, if you already own your barn outright then you might be able to use your actual property as security instead of putting down a big cash deposit. This can reduce your upfront costs and make the financing process a bit easier.
How much does a Barn Conversion cost?
The cost of your barn conversion will depend on the size and condition of the barn, and how much structural work will be needed. Every project is different, but on average, barn conversions can cost anywhere between £1,500 and £3,000 per square metre. It’s important to note that costs can be a lot higher for high-end finishes or if you’re working with a listed building. Some costs to consider will include:
Buying the barn: If you’re purchasing an unconverted barn, this is going to be the biggest cost for this project. Barn costs will of course vary depending on location and condition.
Planning and design fees: Expect to have to pay for things like planning permission applications; architect and structural engineering fees, and covering the costs of any necessary surveys and assessments.
Construction and renovation costs: This includes foundations and structural work, roofing and insulation, windows and doors, as well as plumbing, electrics and heating.
Final touches: Once all the construction is done, you’ll then also need to cover the costs of the more aesthetic touches like flooring, interiors, kitchens and bathrooms.
It’s also crucial to budget for a contingency fund of at least 10 to 15% for unexpected costs. As typically barn conversions always cost more than you expect by the time you get to the end of the project.
Hidden costs to consider in a Barn Conversion project
Converting a barn is rarely a straightforward project, and costs can quickly add up. We recommend making sure you’ve budgeted for these extra costs:
Planning permission and legal fees: Costs can vary between different locations based on the requirements of your local authority.
Structural reinforcements: You’ll find that most barns need additional structural support to meet the modern building regulations.
Utility connections: If your barn doesn’t already have access to water, electricity, or drainage then installing these can be expensive. Get quotes from different local tradesman to make sure you get the best deal.
Specialist materials: Converting a barn can require expensive materials, like reclaimed wood and bespoke glazing.
Contingency fund: We always recommend setting aside an extra 15 to 20% to cover any unexpected costs that might come up.
Comparing Barn Conversion Mortgage lenders
Not all lenders offer barn conversion mortgages, and those that do often have different criteria. Some key things to compare will include:
Deposit requirements: Most lenders will ask for at least a 20% deposit, but some may require up to 40% depending on the risk involved. Similarly to a traditional mortgage, the bigger deposit you have, the better your mortgage terms will be.
Interest rates: Interest rates for barn conversion mortgages tend to be higher than standard mortgages because they are seen as a higher risk. Rates do vary but if you have a strong credit history and a clear plan then you can still get a good deal.
Loan-to-Value (LTV) ratios: Lenders will assess the loan-to-value ratio, which is the amount you’re borrowing compared to the expected final value of the property. Generally, the lower the LTV, the better the mortgage terms.
Additional Fees: Barn conversion mortgages often come with extra costs. This can include arrangement fees, valuation and survey fees, legal fees, exit fees (if you’re planning to switch to a standard mortgage after completion).
Lender Specialisation: Some lenders specialise in self build and renovation mortgages, making them more experienced in funding barn conversions. Others may have stricter requirements or fewer flexible options. At Mayflower Mortgage, we help clients find lenders that best match their project needs.
Common mistakes to avoid when financing a Barn Conversion
Not getting planning permission before applying for a mortgage: Many lenders won’t approve a barn conversion mortgage unless you have full planning approval. Even if permitted development rights apply, you might still need approvals for design changes, utilities, or listed buildings.
Underestimating costs: Many people overlook additional expenses like surveys, legal fees, and unexpected structural repairs. But Barn conversions almost always end up costing more than expected. We recommend making sure your budget is realistic and then still budgeting extra on top of this for any surprises.
Choosing the wrong lender: A standard residential mortgage won’t work for a barn conversion. You’ll need a specialist lender who understands these types of projects and offers the right finance for your situation.
How to prepare for your Barn Conversion Mortgage application
To increase your chances of mortgage approval, you should prepare:
Proof of income and credit history, to show lenders that you will be able to afford the repayments.
A detailed renovation plan, including timelines, budgets, and contractor details.
Planning permission and building regulation approvals, as most lenders won’t approve your funding without these.
Professional valuations of your barn’s projected final value, to make sure your plans make sense financially.
Is a Barn Conversion Mortgage right for you?
If you’re serious about converting a barn into your dream home, then having the right financing for this is essential. Keep in mind that:
You’ll likely need a specialist barn conversion mortgage with staged payments.
Deposits of 20-25% are common, but existing land ownership may reduce this.
Always budget for hidden costs, like planning fees and structural reinforcements.
Work with an expert to find the best lender and mortgage deal for your situation.
Still have questions? Visit our Barn Conversion Mortgage page or book a free consultation with one of our mortgage experts today.