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What is a Refurbishment Bridging Loan?
For property investors looking to renovate or improve a rundown or derelict property, a refurbishment loan can be an ideal solution. A refurbishment bridging loan is a short-term financing option that provides quick access to substantial funds. This allows you to purchase a property in need of renovation and carry out the necessary work before either selling the property or refinancing with a long-term financial solution. This type of loan helps you move quickly on opportunities and ensures you have the funds needed to prevent delays during the refurbishment process.
There are two main types of refurbishment bridging loans:
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Heavy Refurbishment Bridging Loans
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Light Refurbishment Bridging Loans
Heavy Refurbishment Bridging Loan
If your commercial property needs extensive renovation or structural work, it falls into the heavy refurbishment category.
Heavy refurbishment bridging loans are typically preferred by property developers undertaking complex, expensive, and intricate projects that require structural changes. These loans usually necessitate planning permission or permitted development approval from the local council.
Examples of projects eligible for heavy refurbishment bridging loans include:
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Large or complex renovations requiring planning permission.
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Projects that must be authorized and regulated by building regulations.
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Structural changes such as extensions, loft conversions, or new build elements like an annex.
Light Refurbishment Bridging Loan
Not every property development project demands extensive renovations; some require only minor upgrades or aesthetic improvements. For these situations, a light refurbishment bridging loan is the ideal solution.
Although the definition can differ among lenders, under the UK regulatory framework overseen by the Financial Conduct Authority, light refurbishment bridging loans typically do not require planning permission.
Projects that are suitable for light refurbishment loans include:
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Updating kitchens
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Upgrading bathrooms
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Redecorating
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Installing heating and ventilation systems
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Making non-structural improvements
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Performing electrical installations
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Replacing windows or doors
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Remodelling individual rooms
In summary, a light refurbishment bridging loan is perfect for properties needing only modest renovations or cosmetic changes, allowing you to improve the property efficiently without the need for extensive approvals.
Lending Criteria
Criteria | Details |
|---|---|
Completion | 14 working days minimum |
Decision | Immediate |
Interest rates | Starting from 0.75% per month |
Interest options | Serviced, retained, Rolled-Up |
Loan amount | £100,000 to £100million |
Location | England, Wales, Scotland & Northern Ireland |
Loan Term | 3 to 36 months |
Loan to Value (LTV) | Day one value & 100% on build cost |
