In a perfect world, spray foam insulation is a great way to protect your home from the cold.
Unfortunately, as it has been on the market for about 30 years, many people rely on it to keep their homes warm.
But, it can cause serious issues when you want to finance your property, whether you want to remortgage, buying a new home, or applying for an equity release product.
It is often sold as a higher-performing insulator than mineral wool; spray foam is used in thousands of homes, in wall cavities, lofts, and flooring.
The problem is that some mortgage lenders and most equity release lenders won’t touch properties with spray foam insulation because of all the problems it can cause.
Now I’ll explain why mortgage lenders won’t approve an application if it’s a property with spray foam insulation and how to solve this home loan problem.
Getting a Mortgage with Spray Foam Insulations
To understand why your potential buyers get put off when trying to buy a property that has spray foam insulation, first, we’re going to look at what spray foam insulation is.
Spray foam insulation is a chemical product made from two materials called isocyanate and polyol, which react when mixed. It expands to 30-60 times its liquid volume after spraying.
Here are some concerns as to why it’s difficult to get a mortgage if a property has to spray foam insulation:
- Spray foam can cause roof timbers to rot.
- The lack of airflow can cause mold to form, and it can have toxic release odours.
- Spray foam can also devalue your home because you would have to buy a new roof since the spray foam can cause so many problems to the roof.
It can cause a lot of problems, and it can affect your mortgage.
Whether it is closed or open, cell foam is found in your roof; most mortgage companies and banks may not consider lending on a property with spray foam insulation.
Different Spray Foam Insulation
Not all is lost if you want to remortgage your home with spray foam insulation or take out an equity release mortgage.
Here is the first step to identifying the spray foam insulation type.
- Open-cell spray foam insulation, known as half-pound foam, ocSPF, or light-density open-cell SPF, has a sponge-like appearance. The SPF expands during the installation, so the ocSPF can fit in most cracks and crevices.
- Closed-cell spray foam, commonly known as medium-density closed-cell foam insulation, ccSPF, often referred to as two-pound foam, sets rigid, preventing air or moisture from entering your home. It is more stable but more expensive to remove than the original insulation.
If you want to remortgage, removing spray foam insulation is possible.
It’s still important to note that some lenders might still not approve your application, depending on how long the insulation has been installed.
Removal isn’t an easy job because the spray application gets into every nook and cranny.
If the insulation has been installed for a few years, a mortgage lender might decide that it’s too much of a risk and, likely, the damage has already been done.
It’s important to seek professional advice before making such a big decision.
A limited number of lifetime mortgage lenders will consider properties with more impressionable open-cell spray foam.
This includes a requirement for the open-cell spray foam insulation to have been applied during construction, as long as it is the Icynene product, with a guarantee and BBA approval.
Before applying for any mortgage, it is worth investigating exactly what spray foam you have installed in your home and check back on your contractor’s paperwork.
Mortgaging a Property With Spray Foam Insulation
Now we understand the problem, let’s see what solutions there are.
Because contractors still recommend spraying foam insulation, it’s not a very uncommon issue but one that needs a careful approach.
Since a lot of people still make the mistake of installing SPF, here are an indication of potential strategies:
- If you have open-cell SPF, then it is best to consult an experienced broker. Some lenders will reconsider mortgage lending or offer an equity release on this type of property. The choices are extremely limited, so they must approach this very carefully.
- Closed-cell Spray foam insulation can be removed – but note that this will be typically more expensive than the original insulation and may not cause the financing issue completely.
- Replacing the whole roof can solve your problem, but it’s not a low-cost solution. However, a roof doesn’t last forever, and replacing the spray foam at the same time is a good bet.
If you are interested in buying a house with spray foam, there could also be less common alternatives you can use.
For example, if a mortgage lender will not consider approving a mortgage application against the property, even with mortgage retention, but a bridging finance lender might.
On the other hand, Bridging loans are expensive, meaning it has higher interest rates, but they’re also a lot more flexible.
For example, developers use bridging loans to cover the cost of purchasing and renovating properties that aren’t eligible for a standard mortgage product.
But you would need to demonstrate how you plan to repay the loan through a remortgage once the spray foam has been removed, so you would need an agreement to support your application.
Equity Release, Mortgages, and Spray Foam Insulation
Lenders rarely give any definitive guidance on their policy toward spray foam insulation, so it is impossible to know whether they are going to approve a mortgage or equity release without advice from a broker.
Most mortgage lenders rely on the survey to identify the insulation present and use that evaluation to make a decision; some lenders and Equity Release providers refuse to lend against properties with spray foam insulation.
We would still strongly advise against ever-fitting spray foam insulation in your home because of all the disadvantages that can come with it.
However, suitable mortgage options are available to meet your requirements, although Equity Release can be a problem, especially with the closed-type spray foam.
