What is a conversion mortgage and how does it work?

A conversion mortgage is a form of finance for people who wish to convert derelict or abandoned buildings into residential properties. This product is used if a customer wants to maximise their investment and is normally used by property developers or investors.

When would you need a conversion mortgage?

To convert derelict properties into residential properties you need to finance these projects and conversion mortgages are designed for this purpose.

Properties such as windmills, churches and chapels have seen a noticeable increase in conversions into residential properties as they offer space and are in great positions within a town centre or rural environment. These properties also bring the return on investment back for a property developer.

Who is a conversion mortgage for?

Conversion mortgages are taken out by investors or property developers who already have a reasonable sized portfolio and with a good cash flow. Conversion mortgages are mostly used on derelict or abandoned properties, and whilst that does present more risk, it can pay off with a financial reward once completed.

Are conversion mortgages hard to get?

Conversion mortgages are aimed at property investors or developers. You generally don’t have a first-time buyer applying due to the required experience set by a lender. For any lender, they will look at the applicant’s background such as track record, the means to do the development, overall costs and the proposed value once completed.

A broker can guide you through this process to understand the proposed value, costs of work and whether you have the right experience and means to pay back the mortgage also.