When we talk about self-build lending, most people picture an empty plot, drawings rolled up under someone’s arm, and a new home rising from the ground. That’s fair. But here’s something to think about. What if self-build lending could do more?
There’s a category of borrowers out there who aren’t starting from scratch, but they’re taking on a serious project. Structural changes, full internal strip-outs, back-to-brick work. We’re not talking about a new bathroom and a lick of paint. This is heavy refurbishment. And right now, it doesn’t sit comfortably in most lenders’ boxes.
At Dudley Building Society, we’ve been exploring whether our current self-build offering could go further. Specifically, we’ve been considering how it might support a rising number of borrowers tackling heavy refurbishment projects, particularly those that are owner-occupied. These cases don’t fall under traditional self-build, but they don’t suit bridging either. They sit somewhere in between, and it’s a space the market can’t afford to overlook.
What we mean by heavy refurb
Every broker has seen cases like these. An old house bought at a discount because of its condition. The borrower wants to gut it, knock through, rewire, replumb, rebuild. Maybe they’re living on site. Maybe they’ll move in once it’s done. Either way, the uplift in value is clear, as is the funding requirement.
There’s a structure to this kind of work, and it isn’t a quick turnaround. That rules out traditional residential mortgages. But it doesn’t always sit comfortably in bridging territory either. And that’s the issue. It falls into a bit of a grey area.
The shared mechanics with self-build
With self-build, you usually start with land and work up from there. But the funding model, which includes staged drawdowns, milestone sign-offs and controlled risk, also makes a lot of sense for big refurb jobs.
In both cases, you’re releasing funds gradually as the work progresses. You’re keeping a close eye on the build schedule. And from a lender’s point of view, that staged approach offers control without needing to front-load the risk.
So if the mechanics are broadly the same, why is the funding route so different? Especially when the property already exists and the security is there from day one.
Why bridging doesn’t always tick the box
We know bridging has its place. For many investors and developers, it works. But for an owner-occupier living in the property while works take place, a short-term, unregulated facility at a higher rate can be hard to justify.
And that’s before you get into exit routes, refinance plans, or affordability constraints. Bridging can be expensive. It’s usually time-limited. And it’s often set up for people flipping property, not living in it.
So what happens when the borrower’s project is too big for a standard mortgage, but not quite right for bridging? That’s where this gap appears. A repurposed self-build facility could come into its own.
Time to open the conversation
If you take a typical self-build product and adjust the starting point from plot to property, you’re not reinventing the wheel. You’re just applying the same thinking to a slightly different use case.
There are, of course, things to work through. Regulation, risk pricing, and exit plans all need proper thought. But for the right borrower, this kind of structure makes a lot of sense. A lender has more security from the start. The borrower can manage cashflow with phased drawdowns. And the whole thing runs on a set schedule.
We’re not talking about brand new products. We’re talking about adjusting the lens. If brokers can start looking at these heavy refurb deals through a self-build lens, and if lenders can support that shift, there’s a lot of value to unlock.
Tied to what’s happening in the wider market
There’s something else at play here too. High house prices and a lack of stock are pushing more people to buy properties they can fix up. Instead of finding the perfect home, buyers are settling for ‘good bones’ and planning to do the work themselves.
That shift, combined with falling base rates and more interest in variable and discounted products, is changing the market mood. We’re already seeing borrowers explore more flexible options. So it makes sense that the lending structures supporting them need to evolve too.
The opportunity for brokers
For brokers, there’s a clear opportunity to open up this conversation. Not every client who wants to renovate needs bridging. And not every renovation is light enough for a traditional mortgage. By recognising the potential of this ‘middle ground’, brokers can help more clients find finance that fits their plans – rather than forcing them into a box that doesn’t.
At Dudley Building Society, we’re exploring how our self-build product might be used in this way. It’s not a product overhaul, but a shift in how we view it. Because sometimes, the most helpful innovations come from reframing what’s already there.
