Heavy Refurbishment Bridging Loans: structural works, conversions, extensions
Once a project goes past cosmetic into structural work, extensions or a change of use, the lending changes with it. The money releases in stages and the numbers need more care. Here is how it works and where people get caught out.
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What counts as heavy refurbishment
Structural alterations, extensions, loft and basement conversions, commercial to residential change of use, and anything that needs planning permission or building regs beyond certificates. As a rule of thumb, once the works budget passes roughly 15% to 20% of the property's current value, lenders assess it as heavy refurbishment even if the work itself sounds simple.
The loan is usually structured in two parts: a day one advance against the current value of the property, then the works money on top, released in stages. Lenders also cap the total borrowing against what the property will be worth when finished, so a strong end value gives the whole deal more room.
"Heavy refurb is where contingency stops being a nice-to-have. I want to see 10-15% in the budget before I take a deal to a lender, because the lender wants to see it too."
How staged drawdowns work
The works money isn't handed over on day one. It releases in stages, usually in arrears: you complete a phase of work, the lender's monitoring surveyor visits and confirms it, and the next tranche is released. That protects you from over-borrowing and the lender from half-finished projects.
The catch people miss is cash flow. Working in arrears means you front each stage before the money comes back, so the visit timing needs building into your programme, and your builder needs to know how they're getting paid. We walk through the drawdown schedule with you before you commit, not after.
Exits for heavy projects
Sale on completion, refinance onto a buy to let or commercial mortgage, or development exit bridging if you need breathing room after practical completion to sell well rather than fast.
We're writing this one up: a heavy refurbishment drawn down in stages.
See the case studies we have published →Funding Complex Structural Refurbishments with Bridging Finance Broker
What counts as heavy refurbishment?
Structural work, extensions, conversions and change of use, or any project where the works cost passes roughly 15% to 20% of the property's value. If planning permission or building regs approval is involved, it's almost certainly heavy.
What is the difference between heavy refurbishment bridging and development finance?
Rough rule: if the existing structure stays, it's heavy refurb. Ground up builds and major structural rebuilds are development finance. Plenty of deals sit near the line, and we place them with the lender that prices your project best.
Do I need planning permission before applying?
You can apply before it's granted, and for a change of use most lenders want it granted or at least submitted before funds release. We'll tell you exactly what your lender needs at application versus before the first drawdown.
How does a staged drawdown work?
The lender's monitoring surveyor confirms each phase of work is done, then the next tranche releases. It usually works in arrears, so you fund each stage first and the money follows. Build the visit timing into your programme.
Can I get 100% of the works costs funded?
Often, yes. Many lenders fund up to 100% of the agreed works budget through staged releases, as long as the total borrowing stays inside their cap against the finished value. The day one advance against the purchase is where your deposit does the work.
Can I use a bridging loan to convert a commercial property into flats?
Yes, commercial to residential conversion is one of the most common heavy refurb deals. Planning or permitted development rights need to be in place, and the lender will want a credible works budget and exit.
Got a deal like this on your desk?
Tell us the numbers and we'll tell you honestly what's achievable.
Prefer to put it in writing? Email support@bridgingfinancebroker.co.uk