An Introduction to Light Refurbishment Finance


Whether you’re looking to refurbish a property for resale or rent, bridging loans can be a valuable means of funding the project.

A form of short-term finance, light refurbishment loans are designed for Borrowers looking to make general or ‘light’ improvements to a residential or commercial property with a view to increasing its overall value.  

Amongst the list of qualifying modifications are kitchen and bathroom refurbishments; small extensions under permitted development rights; rewires; general cosmetic updates; and projects where no planning permission or building regulations are required.

For those considering a bigger project and involving a structural change to a property requiring planning permission and/or building regulations e.g. extensions, HMO conversions, or the change of use of commercial properties into multiple residential dwellings, development loans are also available.

Applying for a light refurbishment bridging loan is straight forward with an increasing number of lenders and development finance products on the market, providing Borrowers with the opportunity to shop around and find the right option for them.

How much you can borrow will be determined by your own personal situation – your experience of managing refurbishment projects, financial status and of course the Loan to Value amongst other factors. As a guide however, light development bridging loans are typically applicable for works of up to £50,000 and on loans ranging from £75,000 to £1,000,000.

Reputable, market-leading lenders can also provide Borrowers with the opportunity to borrow up to 100% of works for a loan term of up to 12 months. Rolled up interest is also a benefit offered by some lenders with rates starting from 0.70%.

Two forms of light refurbishment loans are available – a first charge loan, suitable for Borrowers for whom the loan will be the principal loan on the property e.g., there is no mortgage, and a second charge loan, designed for those who already have a finance arrangement on the property.

One of the greatest advantages of light refurbishment finance is the speed with which an application can be processed; an important factor when looking to flip a property for immediate resale or working to a tight deadline.

Specialist finance lenders such as Mint Property Finance are also able to offer much greater flex and can often say yes to an applicant when a conventional bank may say no. This benefits the Borrower with a far greater personal experience, shaped entirely to their needs.

When considering any form of finance, it’s important to research the potential risks as well as the benefits. As the terms of bridging finance are typically much shorter than that of a conventional loan, larger interest rates are to be expected.

Borrowers are advised to budget carefully too. Costs can quickly spiral when refurbishing a property leading to unexpectedly high or in some cases unaffordable monthly repayments.

Timings can also easily slip leading to penalty charges in the event of late payments. It’s important to be realistic about the scale, cost and timings of a project and factor in the inevitable surprises. A reputable lender will work with you to identify the risks before they happen; contrary to opinion, it’s not in the interest of either party to falter on the agreement.

If you’ve done your research and scoped the required refurbishment work realistically then refurbishment loans can be a valuable option for property developers and are available to individuals, sole traders and limited companies alike where the funds are being used for a genuine business reason.

To find out more about light refurbishment loans and discover if they’re right for you contact our team on hello@mintpf.co.uk or 0161 710 2006; they’ll be happy to help.

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