Spray foam insulation and equity release/mortgage approval

When it comes to spray foam, it should be treated with caution, as the mere mention of it to a lender will send them running. However, there are different types of spray foam. Closed cell is a no no and lenders will run a mile, open cell, however, is subject to criteria and certification and some lenders will offer terms on this. The biggest tip (other than not having it) is to make sure it is an open cell and carried out by a reputable and certified company.

In 13 years as a mortgage broker, and a previous 8 years with a lender, I have only come across one application declined due to spray on loft insulation. That being said, with the spike in energy prices and the push to make all homes greener and more energy efficient, I can see it becoming more of a problem as people look for cost-effective solutions to reduce their bills. I'm sure no one thinks "I wonder if doing this will affect my ability to get a mortgage on the property?" when they are doing home improvements, especially if they feel they are adding value and helping to make the property greener and so cheaper to heat. We may see similar issues with some solar panel deals, too.

Spray foam insulation rears its ugly head almost monthly and, certainly for those clients looking at lifetime mortgages, its presence means an immediate decline. There are firms specialising in legal challenges to recover at least a part of the cost of installation and removal and we often provide details of these and firms specialising in the removal of spray foam. For all clients this is a case of inconvenience, mess and unnecessary expense if they are able to pay for the removal works. We come across a lot of clients in low income households who have had spray foam insulation installed to save money and come to us looking to repay a mortgage or raise funds for living costs. It is these needs-based clients who are least likely to be financially equipped to pay for removal and likely to be severely impacted by their inability to raise funds against their properties. Many installer websites still imply that spray foam insulation is approved by/available under government grant schemes. This has not been helped by the government washing its hands of the problems faced by homeowners who had spray foam insulation installed under the Green Homes Grant Voucher scheme saying that the decision not to lend is a 'commercial' one and refusing to be drawn on the detrimental effects to the property. 39,000 vouchers were issues and I have not been able to fund out how many of these related to spray foam as 'insulation' is the reason for issue, the type and method of insulation was down to the installer. When you consider the eligibility for the voucher scheme, it is likely that a high proportion of these cases involve low income households so I don't see an end to the problem in the coming years. The government needs to step up and support these households with removal and repair of any deterioration to the property