Remortgage and further advance — the cheapest options
For most London homeowners with an existing mortgage and meaningful equity, remortgaging or a further advance is the cheapest way to finance a loft conversion. Remortgaging swaps your existing mortgage for a larger one at a new rate, useful if your current deal is expiring; expect 2026 rates of 4.2-5.8% on 60-75% LTV. Further advance with the existing lender adds a new tranche to the current mortgage without changing the original deal, typically at a fractionally higher rate than the headline product (existing rate + 0.25-1.5%). Both routes require the lender to agree the after-improvement value (uplift), usually with a desktop or drive-by valuation. London loft conversions almost always increase mortgageable value by more than the cost, making approval rates high. Lenders prefer this route over secured personal loans because the security is on a property they already hold.
Secured and unsecured loans
Where remortgage timing is unfavourable (early redemption penalties on a fixed rate, short residual term, or the lender does not offer further advances), secured second-charge loans and unsecured personal loans are alternatives. Secured second-charge loans (sometimes called homeowner loans) sit behind your primary mortgage on the property and charge 6.5-9.5% in 2026, with terms of 5-25 years and arrangement fees of £1,500-£4,500. Unsecured personal loans up to £25,000-£50,000 (Tesco, M&S, Nationwide, John Lewis) charge 7-12% for prime borrowers over 5-7 years, with no property charge but lower advances and more credit-score-sensitive. For a £75,000 loft, a 7-year secured loan at 8% costs roughly £1,160/month; the same advance on remortgage at 5.2% costs £1,070/month. Always compare like-for-like total cost over identical terms.
Bridging finance for short-term needs
Bridging loans are appropriate where you need cash within 7-21 days, where you intend to refinance or sell on completion, or where remortgaging is timed for after the works (because the post-works valuation will be much higher and unlock more equity). Typical bridging rates in 2026 are 0.65-0.95% per month, plus 2% arrangement fee and 1-2% exit fee. A £100,000 bridge over 9 months costs roughly £6,000-£8,500 in interest plus £3,000-£4,000 in fees — expensive, but justified when the post-works refinance saves more than that over the medium term. Bridging is regulated for residential property; always use an FCA-authorised broker and read the exit strategy carefully. Default rates on bridging in 2024 were 11-14% sector-wide, much higher than mainstream lending.
Staged payments and managing cash flow
Most reputable London contractors structure payment as 5% deposit on contract signature, 15% on site mobilisation, then six further milestones at 5-week intervals adding to 80%, with 5% retention released after the 6-month defects walk. This means the homeowner does not need the full £75,000-£100,000 upfront; first significant payment is week 6-8 of the project. Coupled with a 3-6 month remortgage drawdown (lenders typically offer 90-day drawdown windows after offer), most homeowners can phase finance to match payment timing. Always agree the payment schedule in writing before signing the contract and never pay more than 10% upfront.
