Refurbishment Bridging Loans: fund the works, then exit well
Light refurb finance for projects that add value: buy, improve, then sell or refinance onto a better product. Includes what counts as "light" versus "heavy", the line that changes everything.
Talk to Ashley about your deal
Light vs heavy: where the line is
"Light" broadly means no structural work, no change of use and no planning needed: a new kitchen, bathroom, rewire, redecorate. Cross into structural work or extensions and you're in heavy refurbishment territory: different lenders, staged drawdowns, more scrutiny.
"The classic mistake is calling a project light to get the cheaper rate, then the valuer's report says otherwise and the deal dies at week three. Describe it straight on day one."
How lenders assess a refurb deal
- Purchase price and current value
- Works budget, evidenced rather than guessed
- The end value (lenders call it GDV), supported by comparables
- Your track record on similar projects
- The exit: sale or refinance (bridge-to-let is common)
Why refurb deals net down harder than other bridges
This is the thing that catches refurb clients out, and it's worth understanding before you commit. You're buying something that's not livable or letterable. Fire damage, no kitchen, plumbing and rewiring needed, whatever it is. That's usually why you're getting it at the price you're getting it at.
Now look at it from the lender side. It isn't letterable, so you can't put a tenant in. No tenant means no rental income. No rental income means nothing to pay the monthly interest with. So the lender doesn't ask you to pay it monthly. They retain it, which means they take the whole term of interest out of the loan up front and hand you what is left.
That's why the gross and the net are further apart on a refurb than on almost any other bridge. As a rule of thumb, a 75% gross facility usually lands somewhere between 60% and 65% once everything has come off. There's more on this on our bridging finance guide.
What comes off the top
A recent one, and the numbers are rounded. The client needed £120,000 in his hand to do the works. To get him there the facility had to be written at roughly £141,000 gross, because these come off before he sees a penny:
- Legal fees — about £1,560 on this deal
- Arrangement fee — 2% of the gross, so about £2,830
- Retained interest — twelve months of it, taken up front. On a refurb this is the big one
- Valuation and the smaller charges — land registry and the rest
So don't start from the headline percentage. Start from the number you actually need in your account to finish the work, and we'll work backwards to the gross that gets you there. That's the conversation worth having on the first call.
A recent refurb deal
We're writing this one up: a light refurbishment turned around in weeks.
See the case studies we have published →Your questions
Can a refurbishment bridging loan cover the cost of the works?
Sometimes. Either upfront within the loan to value, or released in stages on bigger projects. Bring an evidenced works budget and we'll tell you which way your deal goes.
Do I need experience to get refurbishment finance?
It helps at higher leverage. On a first project expect a slightly lower loan to value, and lean on our advice harder. Everyone has a first one.
What is bridge-to-let?
Buy and refurbish on a bridge, then refinance onto a buy-to-let mortgage as the exit. Very common, and it works well when the numbers are honest from day one.
What is the difference between light and heavy refurbishment?
Light means cosmetic: kitchens, bathrooms, rewiring, decorating, no structural work and no planning. Heavy means structural alterations, extensions or change of use. The line matters because it changes which lenders will fund you and at what rate, and misdescribing it's how deals die at valuation.
Can I live in the property while renovating it?
If it's or will be your own home, the loan becomes regulated, which changes the rules and the lender list, not the possibility. Tell us upfront and we place it properly.
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