A residential refurbishment bridging loan is fast, short-term finance that can help you complete a wide range of refurbishment projects from light updates to major transformations.
What is a Light Residential Refurbishment Bridging Loan?
Some projects may only require what is referred to as ‘light refurbishment’ and this may include just modernisation works such as:
- Redecoration
- Installing a new kitchen or bathroom
- Re-wiring
- Installing a new heating system
- Simple repairs to a roof, etc.
Whilst every lender will have their own set of criteria, even if your project includes all of the above works, then it will still be considered a light refurbishment, providing that no structural changes, new build elements or planning applications are also involved.
What are Heavy Residential Refurbishment Bridging Loans?
Where your project involves more demanding changes such as an extension, roof conversion or change of use. Again, how each lender will categorise a heavy refurbishment will vary but it likely to cover any project where the project requires;
- Changes to internal or external structure
- Changing a commercial property to residential
- When an application for planning consent is involved
If these more challenging works can be done quickly then a heavy residential refurbishment bridging loan may be ideal but, of course, where the term is going to be longer than a development loan may be more appropriate. Should planning be required as part of the proposed renovations then planning will need to be in place and approved before the loan completes and funds released.
“Rates can start from as low as 0.49% per month (stepped product) for light refurbishment loans with heavy refurbishment loans starting from around 0.65% per month (stepped product)”
How Much Can I Borrow for a Refurbishment Bridge Loan?
We have access to the UK’s leading bridge loan specialist and can source solutions with facilities that include:
- Terms from 3 – 24 months
- Loans from £100,000 – £10,000,000 (larger available on case by case)
- Up to 85% loan to value (LTV) based on works being self-funded
- Up to 75% loan to value (LTV) with works funded by the lender in drawdowns in arrears
What are the Typical Interest Rates for a Residential Refurbishment Bridge Loan?
Obviously, the rate of interest for a residential refurbishment bridging loan will depend upon a number of factors including the type of loan, the loan to value, whether you are funding the works yourself and the exit strategy, etc. Rates can start from as low as 0.49% per month (stepped product) for light refurbishment loans with heavy refurbishment loans starting from around 0.65% per month (stepped product).
Non stepped products start from around 0.77% per month and some lenders increase their rates a little when funds for the works are being included in the facility rather than being self-funded.
Ultimately rates will fluctuate, and Developer Money Market will seek the widest range of options available for your project.
What Fees are Involved?
A residential refurbishment bridging loan will include:
- Application fee – lenders may charge a fee to make the application
- Legal fees – you will have to pay the lender legal fees
- Valuation – A professional assessment of the property purchase value and GDV
- QS / Asset manager – Where works are involved lenders will want to appoint either a QS (heavy refurbs or larger projects) or an asset manager (lighter tough and lower cost) to validate the proposed refurbishment costs
- An arrangement – typically 2% of the gross facility and taken from the facility upon completion
- Early repayment fees – if repaying before the minimum term
- Exit fees – payable upon the final repayment
All of the above will vary from lender to lender and we will help you compare each factor so that you can make an informed choice.
Can I Use a Refurbishment Loan for a Commercial Project?
Yes, refurbishment loans can be used across a range of project types such as:
- Buy-to-let house and flats for letting
- Licensed HMO’s
- Student accommodation
- Retail, industrial and office investments
If you are considering a light or more major refurbishment project, then contact us to discuss your requirements. We will work with you to understand your requirements and find you a range of options for you to consider.
If you have any questions then call us today for an informal chat on 01244 953 360 or email us at info@developermoneymarket.com. Connect with us on LikedIn here.
