Second charge lending solutions for homeowners with incomplete renovations

One of the challenges homeowners often face during major renovation projects is that their properties can unexpectedly become unmortgageable to mainstream lenders. This typically happens if structural work is incomplete or crucial features like kitchens or bathrooms are missing, making the property unsuitable for standard mortgages.

It is becoming increasingly common for these partially renovated properties to need further funding, especially as more homeowners choose to undertake large-scale home improvements, extensions or significant structural renovations. This is particularly true in today’s financial climate, where tighter budgets and rising renovation costs often mean homeowners run short of funds partway through their projects.

Norton Broker Services has identified that many of the brokers it works with are encountering more clients in exactly this situation. This is often due to brokers being unaware of the alternative solutions available, such as a second charge mortgage to support the ongoing work required.

A second charge mortgage can be a helpful way for homeowners to raise additional funds when a standard mortgage is not currently an option. By securing the loan against their existing property, homeowners can access the money needed to complete essential renovations. However, it is important to note that there are risks associated with taking out a second charge, such as the customer’s home being at risk of repossession if payments are not maintained. That said, we’ve often found that once the work is completed, refinancing onto a standard mortgage becomes more straightforward.

While fewer lenders offer funding for properties under major renovation, it certainly isn’t impossible to secure finance. The key to successfully managing these situations lies in working with a specialist broker who understands alternative finance solutions and can help identify the most suitable option for the client, particularly in the second charge mortgage market.

In today’s environment, where renovation costs are escalating and unexpected delays are common, second charge mortgages can offer a practical solution. Recently, Norton Broker Services assisted a broker in securing a £100,000 second charge mortgage. The client, who had run out of funds mid-project, had 80 percent LTV in their property and a good credit score, which meant we were able to provide a solution based on their circumstances. The additional funds allowed them to complete the renovation without further disruption.

One notable advantage of second charge mortgages is the speed at which they can often be arranged compared to traditional first charge loans. This is partly because valuations were already carried out when the property was purchased, saving time in the process. This quicker turnaround can help homeowners avoid extended project delays or the risk of having to sell an unfinished property due to lack of funds.

Although it can be challenging to secure finance for a property undergoing major renovation, it may be achievable with specialist support. At Norton Broker Services, we’ve been active in the specialist mortgage market for over 50 years, helping clients who fall outside conventional lending criteria. Our experience means we’re well placed to guide brokers through these more complex cases, ensuring their clients can complete their renovation projects successfully.