A Full Guide To Financing Your Next Property Renovation: Refurbishment Bridging Loans

11-November-2021 17:14
in Private clients
by Sam Hodgson
Refurbishment Loans: A Full Guide To Financing Your Next Property Development

Whether you're an experienced property developer, a landlord with a large portfolio, or are looking to delve into property investment for the first time, a refurbishment loan can be one of the most important tools you'll have in your armoury, in order to realise an opportunity that comes your way.

  • A refurbishment loan (sometimes known as a refurbishment mortgage) is short-term bridging finance you can utilise to generate more rental income or your point-of-sale profit on an investment property that you don't intend to live in.
  • You can use bridging finance if you have a shortfall in funds to complete the purchase of a property or do any necessary refurbishment on it.

A significant amount of refurbishment finance can be raised quickly to 'bridge' the gap in the funding of your project, and when you either sell the property or arrange a buy-to-let mortgage, the loan is repaid.

Who can get a property refurbishment loan?

Refurbishment loans are suitable for landlords, property developers and investors, and are commonly used for house flipping - when you purchase and renovate a property in order to sell it for a profit.

You can get refurbishment finance as an individual, a sole trader, or through a limited company. And lenders won't scrutinise your credit score, proof of income and bank accounts - unless you're looking to get a buy-to-let mortgage on the property further down the road. 

All this means, the application process can be swift and funds released within days rather than weeks.

But there are certain criteria lenders will look at when they consider your application:

  • The address of the property - the build, location and whether it is suitable to raise finance against securely.
  • Your net wealth - to determine other assets you own in case you are unable to repay the loan.
  • How long you'll need the refurbishment finance for -have you got a solid, realistic plan to get your property from A to B?
  • Your planned exit strategy - how easy will it be to get a long-term buy-to-let mortgage or sell the property on? 
  • If you're a first-time landlord or investor, some lenders will stipulate 'light refurbishment' only.

What can a refurbishment loan be used for?

Refurbishment loans can be used to add value to an investment property when you sell or rent it out. Clifton Private Finance 

Refurb finance is designed to support smaller development projects, compared to property development finance, which is another ball game with different lending criteria, normally applying to ground-up developments.  So if you're a landlord or looking to flip a property, you can apply for refurbishment finance for the following:

  • Refurbishment costs on commercial or residential property
  • Minor cosmetic alterations such as redecoration, a new bathroom, or kitchen
  • Plumbing and drainage work
  • Rewiring and electrical work
  • Major structural changes, extensions, and change-of-use conversions i.e. from commercial to residential, that typically require planning permission

Light refurbishment Vs Heavy Refurbishment Loans - What's the difference?

The finance offered to you may be categorised as a light or heavy refurbishment loan, with different lending terms; depending on the type of work you are planning to do.

Light refurbishment loan

This is the type of work that doesn't need planning permission or building regulation checks. The intended use of the building remains unchanged and you don't need to have experience of completing previous refurbishments. The work can be done by either you or a contractor of your choosing

You can borrow up to 85% of the property value and some lenders will also allow you to borrow the cost of the works to the property.

Heavy refurbishment loan

A heavy refurbishment loan applies to properties where planning and building regs are required, the work is structural, such as an extension, or will result in a change of use - for example, when a 5 bedroom residential house (C3 planning use) is changed into a 9 bedroom multi-occupancy property(C4 planning use).

  • Lenders will often want to see that you have some property refurbishment experience.
  • They will also want to check the list of works, time schedules and costings, and the contractors you have in place to make the project a success.
  • Your planned exit will also be assessed (sale of property or mortgage)


A specialist bridging loan broker can help you find the most favourable lender for your situation, offering the best terms


Refurbishment loan rates and terms from Clifton Private Finance

How much can I borrow to refurbish a property?

Loan size: Clifton Private Finance accepts loan applications from £50,000 with no maximum cap - we can help you get funding for refurbishment projects in the millions.

Loan To Value: The maximum loan to value is up to 85%; meaning on a house worth £100,000 you can borrow £85,000.

How quickly can I get a refurbishment loan?

You can expect to get a decision in principle within 24 hours of applying.

If you already own the property asset you can expect to have the funds in your account between 2-4 weeks from first applying.

If you haven't bought the property yet, you should allow 3-6 weeks for your application to be processed and the money to arrive.

The process of applying for a Refurbishment loan  

5 Steps to Getting Refurbishment Finance for Property Development

Why Use Clifton Private Finance to secure your Refurbishment finance?

  • Our broker team has expert knowledge and access to the short-term lending market meaning we can meet a huge variety of needs for property investors and landlords.
  • In many cases, high street lenders will turn an application down. Our brokers know which lenders to approach to get you the terms and conditions you need.
  • If you're a first-time property investor or landlord, you may find it difficult to get the loan you need on attractive terms. We know which lenders to approach.
  • From start to finish, your dedicated broker will guide you through the process outlined above, be readily available to answer any questions, and take much of the stress and hassle away from you

Our strength is our ability to access a wide range of funding solutions from high street and private banks, specialist lenders, family offices and wealth managers. We also have connections with private investor fund groups.

Bridging finance case study on a london property renovation

Looking for finance for your property refurbishment project?

Call Clifton Private Finance today on 0117 959 5094 or use our simple contact form to get in touch.