Light Refurbishment Finance
Light refurbishment finance is a type of bridging loan which enables property investors and developers to refurbish or convert a property so they may either let it or sell it for a profit. It may be used for the refurbishment of residential and commercial property.
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What is light refurbishment finance
Light refurbishment finance is a type of bridging loan which enables property investors and developers to refurbish or convert a property so they may either let it or sell it for a profit. It may be used for the refurbishment of residential and commercial property.
Light refurbishment loans are for projects that require more cosmetic improvements rather than structural ones. However, this varies from lender to lender and some will allow works under permitted development.
Refurbishment loans can be available on a first or second-charge basis.
Which lenders offer this finance?
Refurbishment finance is a specialist bridging loan, it is available via commercial and specialist lenders who understand property construction.
These lenders can be part of a high street bank, building societies, backed by funds or family offices.
Many do not actively promote themselves to the public and work with carefully selected broker partners.
How much can I borrow with a light refurbishment loan?
Generally, you can borrow up to 75% – 85% of the purchase price or property value, plus 100% of the refurbishment costs. However, 100% finance can be available if another security is made available.
Lenders structure their lending according to their own criteria, we will work with you to fulfil your requirements in a way that suits your needs.
Projects can be financed either:
On the basis of a maximum day one lending advance, for example, 85% loan to value based on the purchase price with no additional monies released for the works.
OR, a lower day one loan, circa 75% Loan to value, with 100% of the build costs funded. These are released in stages as the works progress.
All lenders have their own criteria and products, we can quickly match up the correct lender depending on the level of work required, geographical location and your own property development experience.
What is the cost of a light refurbishment loan?
Lending rates vary significantly and change on a regular basis. It is important that you work with a broker that is aware of these changes, so they can arrange finance which is both deliverable and cost-competitive.
Generally interest will be rolled into the loan, therefore no monthly interest payments will need to be serviced. The interest is repaid on the refinance or sale of the property along with the original loan balance and any arrangement fees that were added to the loan.
Some lenders charge exit fees, which we consider the lowest total cost solution.
Can I do structural work with a light refurbishment loan?
Light refurbishment are designed for projects where no structural work will occur.
- Internal decoration
- Re-plumbing & Rewiring
- Re-plastering
- Reconfiguration of non-supporting walls
- Fitting new kitchen and bathrooms
- Replacing flooring
What can I use a light refurbishment loan for?
- Conversion of a house into flats
- Commercial to residential conversions
- Residential to HMO conversions
- Acquiring unmortgageable property for renovation
- Some permitted development projects
How long does it take to arrange?
We can arrange and complete light refurbishment loans in a matter of days but for the most competitive loans, up to 2 weeks is normal.
Refinancing a completed project?
Where the planned repayment of the loan is a refinance, then a buy to let mortgage could allow you to refinance up to 75% or perhaps to 80% of the property’s new market value.
Beware that many lenders may have a 6 month rule, this means you may have to own the property for 6 months before being eligible to refinance.
We have lenders that are quite comfortable with a refinance before 6 months have passed.
Speak with an expert
We obtain the best possible Bridging Finance terms by using our own in-house analysis tools in combination with our extensive database of lender contacts.
We offer a personal service and you deal with an expert who can understand your needs and deliver accurate solutions in a timely manner.
