Refurbishment Finance - We've got a Game Plan for your Master Plan

Of course, there are some hurdles, with planning rules and building regulations to consider. Careful budgeting is important, too - you need to cover architects and planning fees, specialist contractors, materials and contingencies.

You have enough to do without searching through all the lenders and products available to ensure you get the right financing. At Rangewell, we believe that a specialist Refurbishment Finance arrangement could provide the solution you need.

What is Property Refurbishment Finance?

Property refurbishment loans are a type of short-term finance secured finance. This type of lending is best suited for property investors, landlords and property developers who are looking to refurbish or convert a property before letting or selling it on. 

If you purchase a property and you extend it or refurbish the interior or exterior, the value could increase significantly, so speak to Rangewell; our experts can provide funding information on all sorts of development work such as conversions and the development of multiple properties under one title. 

Criteria for Refurbishment Finance

A bridging lender typically requires collateral in the form of property. Loans can be secured on one property of the several properties combined. The lender and borrower will enter into an agreement where the service provider will take control of the property if the loan is not repaid. Read on to find out more about the criteria for bridging loans. 

The lending market can be overwhelming, and fees, charges, and interest rates can all vary slightly depending on one provider to the next. This means the lending criteria does, too.

Rangewell works with a large panel of lenders, and we can provide our customers with: 

Loan sizes: Bridging loans are available up to any value 

Term: Most lenders in this sector lend up to 18 months, though some may offer 36 months. 

Security: The lender and borrower will enter an agreement whereby the service provider will take ownership of the property if it is not paid. The loan is secured by the lender taking charge of the property.

Location: Our lenders can arrange loans for applicants anywhere in the UK 

Age of applicant: All of our service providers will impose a minimum age limit of 18 years. Some lenders may impose a maximum age limit too. 

Credit history: Bridging loans can be useful for those with 

• CCJs
• Defaults
• Arrears
• IVAs
• Bankruptcy
• Repossessions 

Income Evidence: Bridging lenders do not collect staggered payments on a monthly basis, so evidence of income may not be required.

Loan use: A bridging loan can be put to use for any of the following:

• Funding restoration and renovation work
• Injecting cash into a new business or purchasing an existing business
• To cover some or all costs of the development project 

Interest payments: Unlike a conventional loan or mortgage, interest is typically added to a bridging loan in one lump sum which is paid in full when the loan itself is repaid. 

How much can I borrow?

Most lenders will provide loans of up to 75% of the post-refurbishment value. It is sometimes possible to qualify for higher, but a sizable deposit will be needed alongside a good credit history. Speak to Rangewell today to find out more!

Light or heavy refurbishment?

Refurbishment Loans are available for both light and heavy refurbishment.

Light refurbishment

If a property simply needs redecorating, rewiring or relatively minor changes, such as a newly fitted kitchen or bathroom, this can be arranged through a Light Refurbishment Mortgage, which may cover both purchase or the works alone. Light Refurbishment Mortgages are ideal for developers looking to refurbish a property as an investment, especially those properties where a conventional mortgage might not be available because of the condition.

A light refurbishment property should be currently habitable with working utilities. The work required should not require any planning permission approvals or structural work that requires building regulations approval.

There should not be any change to the use of the property. If the works require a change of use, for example, converting offices into flats, or any structural works requiring consent from the local authorities, this would be considered a heavy refurbishment project and would require a heavy refurbishment mortgage.

Heavy refurbishment

Heavy Refurbishment Mortgages allow experienced property developers and investors to fund both the purchase of a property needing work and the funds to carry out the refurbishment required.

The refurb may include conversion of a single building into multiple letting units, such as self-contained flats or a multi-tenancy home of multiple occupation (HMO), where reconfiguration may be necessary.

With heavy refurbishment, the lender will want to see a schedule of works.

This is a detailed breakdown of the work and costs involved in the project, together with projected timings. A valuer will comment on whether the intended budget is realistic and if the time scale is achievable. Lenders may also want to see evidence of your past projects, to ensure that you have the skills and vision to complete the work.

How does Property Refurbishment Finance work?

Refurbishment Finance is based on the gross development value (GDV), the value of the project once completed. This is also known as the post refurbishment works value.

Loans may available from £100k to £10m. Lenders may consider lending up to 70% of GDV, with funds released in stages. These funds may cover both the property purchase as well as refurbishment works, although funds may also be available for developers who already own a property in need of work.

Terms of up to 18 - 24 months are available, and interest payments may be rolled up in the total loan amount.

As with all property finance, there will also be fees:

• Arrangement fees: These are charged by the lender for arranging the loan and are typically 1.5% to 2% of the loan amount.
• Exit fees: Not all lenders apply exit fees - those that do may charge a percentage of the loan amount or, sometimes, the gross development value.
• Valuation fees: Lenders will instruct a surveyor to value the property both before and post refurbishment works. The scale of these fees will depend on the size of the project.

What information is needed for a refurbishment loan?

When looking to take a loan to refurbish a property, your lender will look at the following info:

• An application form providing details about your current circumstance
• A breakdown of your assets and liabilities
• Details of the property you wish to refinance
• Details of the work planned
• Costs of the work planned
• Timescales of the work planned
• Details of your experience
• Details of your exit strategy 

Speak to Rnagewell to find out what you need to get started with a refurbishment loan.

How Rangewell can help you set up Refurbishment Finance

All types of property finance demand expertise because of the large sums involved.

At Rangewell, our team of financial advisors includes people with specific expertise across the property sector.

They can help you find the right kind of finance arrangement for your refurbishment needs, whether you are an experienced developer with a major project and need finance for property developers, or a property owner seeking to increase the value of your investment.

We can help whether you have a specific refurbishment in mind, such as needing finance for holiday lets, or even a niche project such as a medical facility refurbishment (a big project like refurbishing a hospital, individual premises like refurbishing physiotherapists, or even multiple branches like veterinary practice refurbishment).

Our service is personal. We can work with you to understand your project and the potential as well as the costs. When you call us, we can explain the options that may be available, and help you arrange the most competitive finance to meet them.