Refurbishment Bridging Loan

The UK has been, despite a global pandemic, experiencing one of its best periods for property investment in decades. Thanks in part to a lack of supply, a surge in demand and changing priorities thanks to Coronavirus, prices have skyrocketed since late 2019.

This has meant that the attention of the world was turned towards the UK property market and its relative stability and strong returns.

Whilst global equity markets and bond markets experienced a very rocky few years, the UK property sector has flourished and grown almost exponentially.

This, in turn, has meant an explosion in popularity of buying, investing, and converting properties, and with it the finance industry has adapted to provide better and more specialised products to property investors and developers to accommodate this increase in popularity.

This is something that isn’t expected to change for some time, and as the country bounces back and the economy recovers, the government has made it clear that they intend to put UK property right at the centre of their recovery plan either with incentives, tax breaks, or access to better finance.

One issue, however, that our clients face is that many high street lenders will not provide a mortgage unless a property is in a certain state of repair. Many properties that are bought for a good price are ones with potential and so require some work before they’re eligible for a mortgage. This is where refurbishment bridging comes in, and how we can help our clients that are looking to finance refurbishments.

What is a refurbishment bridging loan?

In very simple terms a refurbishment bridging loan is a type of loan that is designed to cover the costs of refurbishing a property in the short term until the owner either decides to sell the property, or arranges a long term alternative such as a mortgage.

Many of our clients buy properties at auction, and if those properties aren’t in a state of repair to qualify for a mortgage, they approach us to discuss a bridging loan in order to carry out refurbishment before either selling or arranging a longer term solution.

When applying for a refurbishment loan, many lenders will just want to know how long you anticipate you’ll need the finance for, what you’re intending to use it for, and what your exit strategy is in terms of repaying your loan.

Why use a refurbishment bridge loan?

Again, it can be difficult to access funding or finance if it’s purely for refurbishment or if it’s for a property that’s not in a good enough state of repair for tenants or inhabitants. This is seen as a riskier prospect to lenders and banks that other types of lending on property, and so it’s inherently more difficult to access.

That’s why so many lenders have recently started to offer this specific type of bridging loan to clients in order to cater for this short term need. We know, for example, that our panel of lenders has grown substantially in recent years to accommodate this drive in demand, and so it makes sense to go to specialised lenders for this type of project.

Refurbishment bridging loan calculator

To help, we’ve put together a refurbishment bridging finance calculator. This will help you get a better understanding of what you may be eligible for, what the rates may be, and what the costs could be too.

Of course, this is intended as an illustration, and if you’d like a more detailed conversation with one of our advisors or bridging loan brokers then we’d recommend that you speak to them directly.

In our calculator for refurbish finance, you can adjust the amount, deposit, term and rates that will allow you to see what you could afford if you were approved with one of our lending panel.

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Light refurbishments

Generally speaking, there are two types of finance for refurbishments, which are classified as light refurbishments or heavy refurbishments.

This ‘light’ type of finance would generally be for quite minor works, such as replacing a central heating system, having a roof fixed, or mainly for works that wouldn’t require planning permission.

These types of works are light in nature and not considered to major renovation works that would require more significant funding for the property and can be completed fairly quickly.

Heavy refurbishments

These types of heavy renovation works are generally considered to be anything that might require planning permission or anything that requires work on the structure of the property, such as supporting walls, foundations, or anything similar in nature.

Broadly speaking, it also includes anything that would require an extension or addition to the building itself, or any building works that may need to be done as part of building regulations, such as fire doors, separate bathrooms, or things of that nature.

The classification for this this type of bridging finance is due to the fact that it will mostly take longer than light works and will more than likely require a larger amount of lending.

Benefits of a refurbishment mortgage

A refurbishment bridge, or bridging finance, may also be referred to as a refurbishment mortgage, and again the classification of what type of lending it will be will largely depend on the scale of the works you’re looking to undertake.

If you only require a small or relatively straight forward level of renovation then this would be classed as a light refurbishment mortgage, however, if you’re looking to change the structure of the property or add an extension, this would be a heavy renovation, but this is something we can discuss with you in more detail, and something we can help with.

Specialised

Most high street lenders won’t lend against properties that need renovations doing before they’re inhabitable, so one great benefit of this type of bridging finance, or specialist mortgage, is that our panel of lenders understand the project you’re undertaking and have designed their lending around you and your needs, meaning they can offer you the terms, amount and rates that you need.

Flexible

Due to the nature of renovations and refurbishment, most of this type of lending and bridging finance is designed to be flexible in that you can take it for as little as a month, all the way through to 24 months should you require it. All these types of lenders will usually look for from you is a viable exit plan and proof that you’re able to complete your project on time.

More traditional lending can be quite rigid in its terms and rates, in that a lot of these lenders won’t want to lend out to you if you’re looking for a relatively short term loan, however, we’re able to get you access to much more flexible lending.

Speak to our refurbishment loan brokers today

We’ve spent years putting together a team who can discuss all your needs with you and find you exactly the right finance for your situation.

Because we work with a niche panel of lenders we’re confident that no matter what your needs we’ll be able to put you in touch with a lender who’s able to meet those needs and offer flexible terms that work for you.

We’ve also been working with our panel of lenders for years now, so we know that when it comes to getting you the best deals, we’ll always have access to the best, including exclusive rates and offers.

We also understand and appreciate that for many of our clients they need access to capital quickly, and we provide ourselves on working quickly and efficiently to make this process as quick as possible for, which is why we ensure that all our brokers and advisors are able to provide you with the best possible advice.

If you’re looking to talk about bridging finance, a mortgage, or other types of lending, then why not get in touch with us today?