Bridging Loans For Property Refurbishment

Whether you need “light” or “heavy” refurbishment, bridging finance can be a quick alternative to traditional finance. 

What is a refurbishment loan?

Bridging finance is used to “bridge a gap”, and in the context of refurbishment loans, it can be used to improve property value so it may be sold at a higher price. Bridging finance can prove a lucrative financial option for investors and property developers looking to make their property more attractive in a competitive market.

Bridging finance comes in many shapes, but refurbishment is defined in two types. 

The amount of refurbishment, and the scale of the work being done, determines whether a "light" or "heavy" refurbishment loan is required. Naturally, each option has a different rate and eligibility criteria.

How are refurbishment loans different from property development loans?

The difference is the scale and complexity of a project – regardless of whether it is a “heavy” or “light” refurbishment, it will extend only to structural works or internal alterations. These loans do not cover a self-build project or building a home from the ground up. 

What are some general uses of refurbishment finance?

Which would you need – heavy or light refurbishment finance?

For any refurbishment work that requires planning permission for sizeable structural change, i.e. an extension, you would need a “heavy” refurbishment bridging loan. Additionally, a lender’s criteria may be more stringent for these types of loans – you will likely have to prove previous experience, provide costings, and assure a lender of the project’s timely completion. 

You should always consider your exit strategy carefully and factor in the possibility of delays, especially during larger-scale conversions or building projects.

Alternatively, if you only require smaller-scale renovations that do not require planning permissions, i.e. installing or remodelling a kitchen or bathroom, then a “light” refurbishment loan is more suited. Moreover, lenders will not need as many details comparatively with "light" refurbishment loans.

How much can you borrow to refurbish a property?

How much you can borrow will depend on the loan-to-value (LTV) – this is the value of your property or asset expressed as a percentage of the lender's willingness to provide funding. 

The value of the assets you plan to offer as security must be sufficient to cover the loan - taking into account interest payments or additional fees. For instance, most refurbishment loans will be secured against the property that requires work, which is then sold, and the loan is repaid via the proceeds. 

Depending on additional security, you can borrow up to 100% LTV. However, typically the maximum LTV is 85%, and from refurbishment finance lenders, you can secure £25,000 to £25m

You can use our bridge loan calculator to get an initial quote on the overall cost of a refurbishment bridge loan. 

How quickly can you secure a loan to refurbish a property?

Depending on the complexity of your case and circumstances, we can get you a decision in principle after the application process – typically, within days. 

Generally, you can expect funds to appear in your account within 7-14 days, but sometimes they may be released sooner.

Need a refurbishment bridge loan?

With our knowledge and experience, we secure clients' refurbishment loans regularly and swiftly - whether you are a budding, first-time, or experienced investor, our property finance broker team can help meet your needs.

We have access to specialist lenders across the short-term market and can package your case to the right lender. Whether you need a “heavy” or “light” refurbishment loan, we can secure a favourable rate, allowing you to begin your refurbishment project without delay.