Unlock the Potential of Your Portfolio: A Light or Heavy Refurbishment Loan made simple.

Buying a property to refurbish or renovate can be a great way to develop a quality portfolio and build capital. High quality property results in happier tenants, higher rents and in happier investors! Getting the right refurbishment loan will make all the difference to your renovation project!

With the almost permanent shortage of quality property in the UK market and increasing pressure on investors to find ways to improve their margins, refurbishment is a great option.

Whether buying to refurbish, buying to convert or upgrading your existing stock, getting the right funding will ensure your project goes without a hitch (well, at least a financial hitch!)

Because you can buy smarter you can save money and help develop a stronger portfolio.

We’ll help you get thri right product for your needs. Of course that will depend on the amount and cost of the works, the value added and if planning permission is needed.

• Refurbishment bridging loans;
  • Perfect for almost any property purchase. A refurbishment mortgage is unlikely to cover significant works, this would need a heavy refurbishment loan.
  • As the funding is based not only on the purchase price of the property but also on the finished value (GDV) – different schemes will allow more funding or lower cost by adding to the refurbishment bridging loan as works progress;
    • Finance up to 90% of purchase price using property refurbishment finance and fund the refurbishment works yourself
    • Fund 75% of the purchase price on a refurbishment bridging loan and finance up to 100% of the cost of the works (normally in arrears following a visit by a quantity surveyor, valuer or on production of invoices for the renovation work.)
    • Some property refurbishment finance schemes offer 90% of purchase price and 90% of the cost of works.
  • Borrow to purchase the property and for the refurbishment (up to 100% of works costs) – some lenders will consider the scheme and provide the full refurbishment finance before the work is completed.
  • Repayment options;
    • Refinance onto a term mortgage with any suitable lender in the market (remember that some
    • Sale of the finished property refurbishment or converted unit to repay the refurbishment bridging finance.
• Reurbishment bridging loan to term mortgage products for renovation;
  • Use the same lender for the bridge as the term mortgage – saving the cost of changing to another lender.
  • You’ll have a pre agreed mortgage for when the work is finished – reducing the worry of the exit route.
  • Reduced legal & professional fees by not switching lenders at the end of the refurbishment finance stage.
  • If there’s a better mortgage option, you can take it. There’s no tie in to the lender.
• Refurbishment mortgage;
  • For minor or light refurbishments only.
  • As long as the refurbishment is under 15% of purchase price it should fit.

Refurbishment or renovation?

You can use renovation and refurbishment interchangeably and, for the purposes of property finance that’s generally fine.

Renovation really refers to the restoration of the existing property – so maintaining its features and style.

Refurbishment may well be the same process or might involve less work, just redecoration & replacing a kitchen or bathroom or could be as much as moving walls and making structural alterations.

Light or Heavy Refurbishment?

Choosing between a light or heavy refurbishment loan product.

Finance providers offer products depending on the levels of works and the risk to them as a funder. More risk will often mean higher cost of finance.

Lenders have their own definition of when a light refurbishment becomes heavy but it often relates to;

• Is planning permission required?
• Will you be making structural alterations to the property?
• Will you be making external extensions, either outwards, upwards or downwards?
• Is the conversion cost a significant percentage of the purchase cost?

How to get a great refurbishment loan

As with any finance product, the quality of the bridging loan you get is directly related to how good a case we can put together for your bridging application.

In short, we’re looking for the following to put a great plan together.

• The applicants;
  • Your experience and ability to complete any works.
  • Financial situation.
• The plan;
  • Are your plans for the property feasible, legal and costed?
  • Are you protected from the current rates of inflation? What contingencies have you prepared for?
• The exit (repayment) plan to clear your refurbishment finance;
  • For a remortgage, will a mortgage be available?
  • Is the finished value (GDV – Gross Developed Value) realistic and rent (if applicable) sufficient?
  • For a planned sale is the finished property able to be sold in a realistic time?

Frequently Asked Questions – Refurbishment finance.

When would a refurbishment bridging loan be required for a refurbishment project?

As soon as your project exceeds the budget you have available then refurbishment finance is going to be a necessity. Some property investors will work through the refurbishment gradually and as their cash-flow allows but the time/cost can sometimes mean that having a property out of action for a number of months could end up costing more than paying the professionals to get the job done quick!