How to Finance a Loft Conversion in 2026: Your Options Explained

How Much Do You Need?

First, fix the number. Loft conversion costs in London vary widely by type. A Velux (roof light) conversion starts from around £15,000–£28,000. A rear dormer typically runs £28,000–£48,000, while a mansard conversion comes in at £38,000–£65,000 or more. In practice, most homeowners need to fund £20,000–£50,000. All four major finance routes can cover that range, though the costs and conditions differ a great deal.

Get a free estimate before you approach any lender. Knowing the exact figure stops you borrowing more than you need, which is costly, or less than you need, which stops the work mid-project. See our full pricing guide for a breakdown by conversion type.

Option 1 — Remortgaging to Release Equity

Remortgaging means you replace your existing mortgage with a new, larger one and take the difference as cash. Take a property worth £500,000 with a current mortgage of £200,000. Remortgage to £250,000 and you release £50,000 — enough to fund most dormer conversions comfortably.

The chief advantage is cost. Mortgage rates sit in the 4–6% range for a good credit profile, far below any unsecured borrowing. The repayment term can also stretch over 20–25 years, which keeps monthly payments manageable. On a £40,000 release at 4.5% over 20 years, for example, the extra monthly payment is around £250.

The trade-offs are worth understanding too. If your current deal carries early repayment charges (ERCs) — typically 1–5% of the outstanding balance — these can erode or wipe out the savings from the lower rate. Arrangement and valuation fees also apply, usually £1,000–£2,000 in total. Crucially, the loan is secured against your home, so the property is at risk if you cannot keep up repayments. Extending the term also raises the total interest you pay, even at a lower rate.

Remortgaging makes most sense in three situations. First, when your current fixed-rate term is ending, so no ERCs apply. Second, when you keep at least 20–30% equity after the release. Finally, when current rates are favourable next to your existing deal.

Option 2 — A Further Advance from Your Existing Lender

A further advance is a simpler variation. Rather than replace your mortgage entirely, you borrow extra funds on top of it from the same lender. There is no full remortgage, which means no new legal work and, in most cases, no valuation fee. As a result, the timeline is faster — often four to six weeks rather than eight to twelve.

Your lender charges a separate rate for the further advance, apart from your main mortgage rate. It is typically a touch higher than a new remortgage deal on the open market, in the 5–7% range. The advance sits alongside your existing mortgage and runs as a separate facility.

This route is especially useful if you are mid-way through a fixed-rate period with ERCs, since you avoid breaking the existing deal while still tapping your equity. That said, check the specific terms directly with your lender. Not all lenders offer further advances, and some restrict them to certain purposes.

Option 3 — A Secured Home Improvement Loan (Second Charge)

A secured home improvement loan — also called a second charge mortgage — is a separate loan secured against your property that runs alongside your existing mortgage rather than replacing it. Because it is secured against your home, lenders can offer lower rates than unsecured personal loans, typically in the 6–9% range.

The key benefit over remortgaging is that your existing mortgage stays completely untouched. Say you locked in a sharp fixed rate a few years ago and still have several years of that deal left. A second charge loan then lets you access the equity you need without triggering ERCs on the first mortgage. Amounts up to £100,000 are commonly available, and repayment terms of five to fifteen years give you flexibility on monthly payments.

The downside is added complexity. Running two separate mortgage-style debts against your property muddies your finances and raises your overall risk. Rates are also higher than a straightforward remortgage. For these reasons, arrange this route through an independent mortgage broker who can compare second-charge products across the whole market.

Option 4 — A Personal (Unsecured) Loan

A personal loan needs no security against your property — it rests on your creditworthiness alone. The application is simpler and faster than any mortgage product. You often get a decision within days and the funds within a week.

The big drawback is cost. Personal loan rates for home improvements currently sit in the 7–15% range. Lenders also cap the amounts at around £25,000–£35,000, which covers a Velux conversion but falls short of most dormer or mansard budgets. Repayment terms are shorter too, typically two to seven years, which pushes up the monthly payment next to a mortgage-secured option.

Personal loans suit three situations. First, funding a smaller conversion where the total is well under £25,000. Second, bridging the gap between your savings and the full project cost. Finally, accessing funds quickly when you have little mortgage equity but a strong income and credit profile. Comparison sites such as MoneySuperMarket and Experian show representative APRs without affecting your credit score.

The ROI Case: Does Borrowing Make Sense?

For most London homeowners, the case for borrowing to convert is compelling. As our guide to how much value a loft conversion adds explains, a £40,000 dormer conversion on a £500,000 London property typically adds £80,000–£100,000 in value. That is a net gain of £40,000–£60,000 before interest. Even on a five-year personal loan at 10%, the total interest on £40,000 comes to roughly £11,000. In most London locations, then, the return still far outweighs the cost of finance.

The sums are less clear-cut in lower-value markets. There, the percentage uplift may be similar, but the absolute figures are smaller. So if you are outside London, get a local estate agent's view on likely uplift before you commit.

When to Sort Your Finance

Arrange your finance — at minimum, an approval in principle — before you sign a contract with a builder. Many loft conversion contractors ask for a deposit of 10–20% before the structural calculations and planning applications begin. Arranging finance after you sign only creates needless pressure and risk.

Timelines vary by route, so plan ahead. A remortgage usually takes eight to twelve weeks from application to completion. A further advance or second charge mortgage typically takes four to eight weeks, while a personal loan can be in place in under a week. Work backwards from your preferred start date and begin the finance process accordingly.

Our team provides a detailed, free estimate — broken down by stage — so you can approach lenders with a precise figure rather than a guess. Request your free estimate and we will have the numbers to you within 48 hours.