Refurbishment loans are available on residential properties that require works.

Depending on the amount of works planned will determine the most appropriate way forward.  The price of works and the extent of works being done will see a transaction classed as either a light or heavy refurbishment.

Loans are usually short-term, with product pricing in line with bridging loans (link to bridging product page).

These facilities are secured by a single property asset.  Multiple requests would be individually assessed.

On successful completion of the works, properties are either sold or refinanced and retained as a long-term investment.  We can of course assist with refinancing.

Affordability and repayment

Repayment is typically on an interest only basis.  Interest can be serviced monthly or can be rolled up and deducted from the loan amount.  Ultimate repayment comes from the sale or refinance of individual properties.

Ownership structures

Customers are usually builders who are constructing themselves, or can be project managers/professional developers who have brought in a builder in to complete the scheme on their behalf.  Acceptable customer types include:  Sole Trader, Partnership, Limited Company (Ltd) or Limited Liability Partnership (LLP).

Previous refurbishment experience is always preferred, however first-time borrowers can also get finance.

Loan terms and lending criteria

Lending terms are based on the current property value, refurbishment costs and completed property value (GDV).  Standard financing is available up to 75% of the current property value and up to 100% of the refurbishment costs.

If the intention is clear at the outset for the property to be refurbished and retained, then we have access to bespoke loan products that allow for both, combining both a refurbishment phase and the long-term mortgage following completion of works.

Pricing and fees

Loan terms are usually capped at 12 months and interest rates are quoted monthly.  Pricing can vary from 0.7-2% per month.