How To Get a Mortgage For a Listed Building Easily

There’s something magical about listed buildings – the character, the architecture, and the stories they tell. 

You might be drawn to the rich history or the unique features that make these properties unlike anything else. But getting a mortgage for a listed building can be challenging. 

Lenders are cautious, and there are extra regulations to follow. 

With the right plan, though, you can get the funding you need and make your dream of owning a piece of history come true.

In this guide, you’ll learn everything you need to know about getting a mortgage for a listed building.

You’ll understand the different grades of listed properties, find the right lender, and handle the application process with confidence. 

We’ll make sure you have all the information to make informed choices every step of the way.

What is a Listed Building?

In the UK, a listed building is one considered important due to its architectural or historical value. 

In simple terms, it’s a special place that needs protecting for future generations. 

When a building is ‘listed’, you can’t just make changes like knocking down walls or replacing windows without getting proper permission. 

These buildings are included in the National Heritage List for England to make sure they are preserved.

Almost every building built before 1840 that remains in its original condition is likely to be listed. 

While this is fantastic for preserving history, it can make getting a mortgage a bit more complicated.

Can You Get a Mortgage for a Listed Building?

Yes, you can get a mortgage for a listed building, but it’s not exactly a walk in the park. 

Lenders are generally more cautious about lending on listed properties for a few reasons. 

First off, they want to be sure they can sell the property quickly if you default on the loan. 

And because listed properties are a bit niche and not everyone’s cup of tea, they can be tougher to sell on. 

Lenders worry about the potential market for resale, and that means more risk for them.

On top of that, listed buildings often come with maintenance challenges. 

Because you’re dealing with something historic, there can be higher costs involved to keep things in good nick.

Imagine trying to find a replacement for that quirky old stained glass window that’s a key feature of the property. Not exactly something you can pick up from your local DIY store is it?

The Different Grades of Listed Buildings and How They Impact Your Mortgage

Listed buildings come in different grades, depending on just how important they are. In England and Wales, there are three main grades:

• Grade I: These are the most important buildings, like castles or iconic landmarks. Only about 2.5% of all listed buildings are Grade I, and getting a mortgage on one can be very challenging because they often need a lot of care.
• Grade II*: These buildings are of more than special interest. They’re still rare, making up just under 6% of listed buildings, but a bit easier to deal with compared to Grade I.
• Grade II: This is the lowest grade, but still significant. About 91% of listed buildings are Grade II, and they are generally the easiest to mortgage since they are less complex.

Scotland, and Northern Ireland have similar categories for listed buildings:

Scotland

• Category A: Buildings of national or international importance. These are highly protected and difficult to get a mortgage for.
• Category B: Buildings of regional importance. Easier to work with than Category A, but still need special care.
• Category C: Buildings of local importance. These are the easiest to mortgage but still require specialist attention.

Northern Ireland

• Grade A: Buildings of national importance, often grand or well-preserved. Very hard to get a mortgage for.
• Grade B+: Similar to Grade A but with some imperfections. Lenders are a bit more open to these.
• Grades B1 and B2: Buildings with local importance or slight alterations. Easier to mortgage but still need care.

The rule of thumb: the higher the grade, the more protection it has, and the harder it is to get a mortgage. 

The more important the building, the stricter the rules, and the fewer lenders willing to take the risk.

How To Get a Mortgage for a Listed Building?

How do you get a mortgage for a listed building without the stress?

The best way is to get help from an independent mortgage broker who knows about listed buildings.

High street lenders may not be interested in these properties, but a specialist broker can help you find lenders who are more willing to consider them.

Here are some practical steps to help you:

1. Get a Property Valuation, Mortgage lenders will usually want to know if the property you’re eyeing is worth lending on. They’ll arrange a valuation to make sure it’s marketable. It’s a bit like a reality check, making sure they’re not lending money on something that’s one stiff breeze away from becoming rubble.
2. Check for Insurance. Insurance for listed buildings can be expensive. A standard insurance policy won’t cut it – you’ll need a specialist policy. Get an indicative quote early on to avoid any surprises, and make sure it covers all the quirks of your listed gem.
3. Get a Full Survey. You’ll need a full structural survey. Yes, it’s pricey (usually between £500 and £1,500 in the UK), but it’s non-negotiable.You need to know if there are hidden issues like woodworm or crumbling walls. Make sure the surveyor you choose is familiar with listed buildings and approved by your mortgage lender.
4. Check Any Previous Work. Make sure any previous modifications have the proper consents. If someone decided to ‘DIY’ a new porch without the necessary permission, guess who’s liable for fixing that? Yup, you guessed it – you. It’s crucial to get this checked early on.

How Much Deposit Do You Need?

Here’s the money bit – literally. 

To get a mortgage for a listed building, most lenders will want a deposit of around 20-25% of the property value. 

Listed buildings present a higher risk, so lenders like a little extra security. In some cases, you could secure a mortgage with as little as 10% deposit. 

But you’ll need a solid application, and it’s best to work with a broker who knows where to look.

If you’ve got a bigger deposit, you’re in luck. A higher deposit can give you access to a wider range of mortgage providers and potentially lower rates. Lenders love a bit of extra reassurance.

What About Affordability?

Affordability for a listed building mortgage can be stricter than usual. Lenders will look at your income, outgoings, and how much you’ll need to spend on maintenance. 

If they think the monthly upkeep will push your budget to the limit, they might decline your application. Be prepared to show a robust financial plan.

Remember, listed properties aren’t just old – they’re like the fancy antique of the property world. You’ve got to be willing (and able) to give them the love they need.

What Restrictions Should You Expect?

Buying a listed building is more than just signing on the dotted line and calling it a day. There are some restrictions you need to be aware of:

• Maximum Mortgage Terms. Because listed buildings are a bit more fragile and can degrade faster, lenders often cap the term length at 20-25 years, as opposed to the standard 25-30 years. It might mean higher monthly payments, so read the terms carefully.
• Consent for Renovations. You’re probably dreaming of making the place your own, but beware – you’ll need consent from your local authority for almost anything beyond routine maintenance. Want to replace those creaky windows? Better get the paperwork ready.
• Higher Maintenance Costs. As charming as these buildings are, they come with high maintenance requirements. Keeping original features intact can be costly, and lenders will factor these into your affordability assessments. If you’re not ready to splash out on upkeep, a listed building might not be for you.

Remortgaging and Buy-to-Let Mortgages for Listed Buildings

Remortgaging a listed building is possible. But you’ll likely need a specialist lender.

This can help you get better rates or release equity, but the same challenges apply as when you first bought the property. 

Lenders will want to see that you have kept the property in good condition and that it still has its original features. 

You’ll also need to provide a full valuation so lenders can confirm the property’s value is still intact. 

Specialist brokers can help you find the right lender who understands listed buildings.

If you want to rent out a listed building, buy-to-let mortgages are available, but it is a niche area. 

Lenders will want proof that you have experience maintaining a listed property before approving a buy-to-let mortgage. 

You may need to provide maintenance records, proof of planning consents for any work, and a solid rental plan showing the property will earn enough income. 

The lender will also want to make sure the property stays in good condition for tenants and keeps its historic value. 

They may ask for a higher deposit (usually 25-30%) and stricter affordability checks compared to standard buy-to-let mortgages.

Bridging Finance for Listed Buildings

Sometimes, buyers opt for bridging finance to purchase a listed building, especially if it needs major refurbishments before it’s habitable. 

Bridging loans are short-term loans that can help cover the cost of buying the property and carrying out the necessary repairs. 

Once the work is done, you can then switch to a standard mortgage. 

Bridging finance can be a lifesaver if you’re buying at auction or if the property is uninhabitable in its current state.

Can You Get a Listed Building Mortgage with Bad Credit?

Bad credit can make things tricky, but not impossible. Specialist lenders are sometimes more willing to work with borrowers with poor credit. 

However, it will limit your options, and you’ll likely face higher interest rates. Applying for a lower LTV mortgage (i.e., a bigger deposit) can help boost your chances.

The Bottom Line: Is It Worth It?

Getting a mortgage for a listed building can feel a bit overwhelming. 

There are maintenance issues, specialist approvals, and more steps than with a regular home. 

But if you love the idea of living in a home full of history and character, it can be worth it.

It takes some extra effort, but if you’re ready for it, it’s all part of the experience. 

The key is to know what you’re getting into and get the right help. 

A good mortgage broker can make all the difference. Here’s how they can help:

• Find the right lenders who specialise in listed buildings, saving you time and hassle.
• Provide expert guidance with valuations, surveys, and permissions, making the process smoother.
• Get you the best mortgage deal, tailored to your needs.
• Handle all the paperwork and approvals, giving you peace of mind.

If you want to save time and avoid stress finding the right broker, get in touch with us. 

We’ll connect you with a good mortgage broker who knows what they’re doing and can guide you every step of the way.