Light Refurbishment Mortgage

Looking for finance development work on your investment property? Specialist refurbishment mortgages exist to finance the property purchase (where necessary) and refurbishment work itself, with separate products on offer depending on the nature of the work in question. Light refurbishment mortgage loans are short-term bridging loans which are designed to be repaid upon completion of the works and a subsequent sale or remortgage to a BTL mortgage or similar.

What is a light refurbishment?

A light refurbishment definition covers limited repairs, such as redecoration or refurbishment works such as installing a new kitchen or bathroom. These types of works are usually financed with a light refurbishment mortgage, which the borrower can take out to purchase or remortgage a property needing these works. Light refurbishment mortgages are ideal for buy to let properties, including single dwelling residential properties and HMOs.

The sum borrowed allows the landlord or investor to buy the property at an attractive price and deliver the works (works which are designed to increase the underlying value of the property and increase the rental income that can be achieved from it.)

Why choose a renovation mortgage?

Most high street lenders will only offer a mortgage secured against a property that is deemed to be ‘habitable’. this means that renovation, conversion and other ‘unconventional’ purchases need to be financed with a specialist product. Hank Zarihs Associates works with a panel of experienced, trusted lenders which offer this kind of specialist development finance at competitive rates.

There are both light renovation mortgages and heavy renovation mortgages available, depending on the scale of the works that you are intending to carry out. These products are short-term bridging loans, with the refurbishment bridging loan repaid with a switch to an appropriate long-term product such as a buy to let mortgage at the point of completion, or proceeds from the sale of the property itself.

Light refurbishment calculator

Our light refurbishment mortgage gives you a sense of how much you might pay for your development mortgage. Simply add the relevant fields into the refurbishment mortgage calculator to see how much you will pay. The calculator will tell you the costs of your bridging loan, with a breakdown of the gross sum that will need to be repaid at the end of the term once the works have completed. The refurbishment mortgage calculator also gives you an idea of the costs that you would then pay for the longer-term buy to let loan that you would then switch to in order to repay the bridging loan.

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Types of properties for light refurbishments

Light refurbishment bridging loans are usually applied to:

• Single dwelling residential properties
• HMO residential properties
• Semi-commercial and commercial properties
• Occasionally they can be used to convert a residential property to a small HMO.

Light refurbishment bridging finance can also be taken out by individuals, companies or trusts.

Types of work that can be carried out on a light refurb

There is no legal definition of light refurbishment works, but they are understood by lenders to fall into the quicker end of improvement, refurbishment or conversion works – where planning permission isn’t required. For example, these light refurbishment works could be:

• Installation of a new kitchen or bathroom
• General decoration to improve the presentation of the property in order to increase its rental value
• Installation of new windows
• Rewiring the property
• Adding central heating
• Carrying out non-structural improvements
• Sometimes, to convert a single dwelling residential property to an HMO where only light work is required

Difference between light and heavy refurbishment mortgages

So, we’ve covered the scope of light refurbishment mortgages, but how do they differ from heavy refurbishment mortgages? The difference lies in the scale of the necessary works. Heavy refurbishment bridging loans are used where structural changes are required and where planning permission is necessary. These products might be used to fund:

• Any project which requires planning permission or building regulations
• Structural works to the interior or exterior of the house
• significant conversion
• A property extension

For works which are yet more significant – such as rebuilding a property or developing an apartment block, there will be more appropriate forms of development finance available. Contact the expert team at Hank Zarihs Associates for advice and a tailored illustration from our lending panel within the hour!

It’s worth noting that light refurbishment mortgages tend to be less expensive than heavy refurbishment mortgages due to the lower risk of a timely redemption within the bridging loan term (usually 6 months to 2 years.) For both types of refurbishment mortgage, a deposit of 75% more is expected.

Loan repayments can be as low as 0.43% pm for a 50% LTV on a residential light refurbishment mortgage, although rates vary widely – contact Hank Zarihs to find out what the most competitive rates are for your project right now. Interest can also be serviced in different ways depending on your needs – for example, it can be serviced monthly, rolled-up or part rolled-up.

Call us today!

To find out the various mortgage options for renovations, please contact the Hank Zarihs Associates team from 9 am to 9 pm, Monday to Friday, on 44 (0) 20 3889 4403. Alternatively, complete the web call back form on our website and let one of our team contact you at a time that best suits your needs.