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Can I get a mortgage on a Grade II listed building?
Living in a Grade II listed building is the dream of many prospective or existing homeowners. Many beautiful homes have Grade 2 listed status, and if you are a fan of period features and traditional style over modern architecture, you may find yourself wondering if you can get a mortgage on a Grade 2 listed building. The good news is that even though this is a relatively niche mortgage product, there are lenders who work specifically with Grade 2 listed buildings.
At Teito, we are a whole-of-market mortgage broker meaning we have access to deals not available to the general public, including those who lend on Grade 2 listed buildings.
What is a Grade II listed building?
Recognising a building as listed means that it is of special architectural or historical interest and requires preservation. Generally speaking, all buildings built before 1700 and close to their original condition are likely to be listed. The majority of buildings built between 1700-1850 are also more likely to be listed. Grade II status buildings are the most popular type of listed building in England and Wales, with more than 90% of listed buildings being in this category. Owning a Grade II listed building means there are certain specific planning restrictions in place designed to protect the property, which as a homeowner, you should be aware of.
It is important to note that the Grade II listed status exists in England and Wales, only. In Scotland and Northern Ireland, there is a separate listed status system.
Why are Grade II properties a problem for lenders?
As a relatively unusual type of home, Grade II listed buildings represent a higher risk than a standard home purchase for mortgage lenders. This is because there is a concern that the pool of interested buyers is limited and that this may affect the future value. For this reason, you may find that the rates offered on a Grade II listed property are higher than for a standard home.
Don't worry, our advisors can help you to get the best deal possible, and this shouldn't put you off making an offer on your dream home!
Loan to Value ratios on Grade II Listed buildings
You will find that lenders are less likely to offer a high Loan to Value (LTV) on a Grade II listed building, to account for the increased risk. The LTV cap will depend on the lender, the listing status, among other factors. However, you may find that given the right circumstances, some lenders who are willing to lend at 90-95%.
Mortgage term on Grade II Listed buildings
Some lenders will cap the mortgage term on Grade II listed buildings to 20 to 25 years to account for the age of the property and mitigate their risk that the condition will deteriorate.
What else should I look out for?
For Grade II listed buildings, there are more likely to be restrictive covenants applicable that should be declared by the vendor ahead of the sale.
Your mortgage lender will consider these restrictions carefully, so make sure you understand any that are applicable.
Another consideration to be mindful of is the cost of insuring a Grade II listed building. Some of these properties can be costly to insure, given the age and expense of replacement in the event of a total loss. We would recommend making enquiries with insurers before finalising the sale.
Will I need a larger deposit for a Grade II listed building?
To mitigate the increased risk of these properties, some lenders will require a larger deposit than for a standard home. While there are lenders that offer a higher LTV, getting the best deal means that maximising the pool of potential lenders. With a higher deposit, you will be able to access more lenders and secure a better rate on your new mortgage. That being said, it is possible to get a mortgage on a Grade II listed building with a smaller deposit, get in touch with one of our advisors to find out more.
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What if I have bad credit?
With a poor credit history or adverse credit on your record, it is undeniably more difficult to get a mortgage on a Grade II listed building. There are many reasons for having bad credit on your record, from simply missing a few payments through to CCJs and bankruptcy. The type and age of adverse credit will impact on your chances. It is not impossible to get a mortgage on a Grade II listed building with bad credit, complete our simple online form and one of our experienced advisors will be in touch!
Repairing, maintaining and developing a Grade II listed building
There are restrictions when it comes to performing work on a Grade II listed building.
Limitations to the exterior of the property are generally the most common. However, if there are distinctive features in the interior, you will need to pay special attention to these too. Replacing or modifying features such as windows and doors will typically require consent from the local authority. Performing work without consent is a criminal offence, so make sure you understand the specific restrictions in place on the property.
Assuming you have permission granted, you may find that the pool of specialist contractors available to perform the work is small. Make sure you can see a record of their previous work and read their reviews. Beware that standard items are unlikely to fit the bill, adding another potential expense.
It is also essential to understand if any work carried out by the previous owners was authorised and performed correctly. If the work was not completed in line with any restrictions, you might need to pay for rectification works.
Sourcing a suitable surveyor
It is recommended that you source a surveyor who is experienced in valuing Grade II listed buildings.
They will have the right level of expertise to provide a fair valuation for your mortgage; someone who is not experienced in older properties may negatively influence the mortgage lender's decision making.
How can I learn more?
As mortgages for Grade II listed buildings are a relatively niche product, we would recommend that you use an experienced mortgage broker. At Teito, we are an independent whole-of-market broker, meaning we have access to deals that are not generally available to the public.
If you are looking to buy a Grade II listed building and need a mortgage, complete our simple online form today to get started.
Choosing an Adviser
Selecting a qualified and experienced mortgage adviser is of great importance. To choose a suitable adviser, evaluate their qualifications, experience, and reputation, and ensure they are regulated by the Financial Conduct Authority (FCA).
Read reviews from previous clients and make sure they provide a clear explanation of the products and services they offer, as well as the fees and charges associated with them.