Key Takeaways
- Borrow from £50,000 for refurbishment projects, with low loan-to-value (LTV) secured against your property.
- Flexible repayment options: Exit strategies include selling the property, selling a different property, or remortgaging.
- Increase property value: Use the loan to enhance your property, potentially securing better long-term mortgage rates.
- Fast funding: Funds can be available in as little as 72 hours.
- Expert guidance: A dedicated broker ensures a smooth process from application to repayment. We can also compare rates on your behalf, and our services are free of charge!
What Is a Refurbishment Bridging Loan?
A refurbishment bridging loan is a short-term financing solution designed to fund property renovations or improvements.
Whether you’re updating a residential property or upgrading a buy-to-let investment, these loans provide fast and flexible capital, ensuring your refurbishment project proceeds without delays.
How Does It Work?
- Loan Amount: Borrow from £50,000, secured against the property you plan to refurbish or other properties you own.
- Short Term: Loans typically last 6-12 months, with no penalties for early repayment.
- Exit Strategy: Repay through the sale of the property, the sale of another property, or by remortgaging.
- Added Value: Increase the property’s market value, potentially improving future financing terms.
To get an idea of how much it’ll cost, use our bridging finance calculator.
Why Choose a Refurbishment Bridging Loan?
Refurbishment bridging loans are ideal for property developers, investors, and homeowners looking to unlock the potential of their properties quickly and efficiently. Here’s why:
Speed of Access to Funds
When opportunities arise, timing is critical. Bridging loans can be arranged in days, ensuring you have the funds ready to begin work or secure a property that needs immediate attention.
Flexibility
These loans cater to a range of refurbishment needs, from minor cosmetic upgrades to extensive structural work. Unlike traditional mortgages, they are designed with short-term goals in mind.
Secure and Low LTV
Lenders assess the loan based on the value of the secured property, not your income or credit score. With low LTVs (typically far under 75-80%), your risk and borrowing costs remain manageable.
How Refurbishment Bridging Loans Can Be Used
Residential Renovations
From updating a kitchen to transforming a dated interior, a refurbishment bridging loan enables homeowners to increase their property’s value and appeal.
Buy-to-Let Upgrades
Landlords can use these loans to refurbish rental properties, attracting higher-quality tenants and boosting rental income.
Auction Purchases
Many auction properties require immediate renovations to become mortgageable or habitable. Bridging loans provide the capital to bridge the gap.
Property Flipping
Investors can purchase, renovate, and resell properties for profit. Bridging loans support the entire lifecycle of the project.
Key Features of Refurbishment Bridging Loans
Low Loan-to-Value (LTV)
Typically, the maximum LTV is 75-80%, depending on the lender and property type. This ensures loans are secure and manageable.
Roll-Up Interest
Most bridging loans allow for rolled-up interest, meaning you don’t make monthly payments. Instead, the interest accrues and is repaid with the principal at the end of the term.
Flexible Exit Strategies
Common exit strategies include:
- Selling the property post-refurbishment.
- Selling another property to release funds.
- Remortgaging to a standard mortgage, often at a lower LTV and interest rate due to the improved property value.
The Benefits of Refurbishment Bridging Loans
Enhanced Property Value
Investing in renovations can significantly increase a property’s resale or rental value, making it easier to recoup your costs.
Better Mortgage Terms
By remortgaging after refurbishment, you could secure a lower LTV and reduced interest rates, saving money over the long term.
No Long-Term Commitment
With a bridging loan, you’re not tied to long-term monthly repayments. The loan ends when you execute your exit strategy.
Eligibility and Application Process
Who Qualifies?
- Homeowners, investors, and developers with property to secure the loan.
- Applicants with a viable exit strategy.
Your income and credit score are less significant than the property’s value and your exit plan.
Application Steps
- Consult a Broker: Discuss your needs and receive expert advice.
- Loan Approval: Get a decision in principle within 24-48 hours.
- Valuation: The lender assesses the property’s value.
- Funds Released: Receive funds within 72 hours of approval.
Costs of a Refurbishment Bridging Loan
Interest Rates
Monthly rates typically range from 0.68% to 1%, depending on your LTV and the lender.
Additional Fees
- Facility Fee: 1.5-2% of the loan value.
- Valuation Fees: Approx. £950 but may vary.
- Legal Fees: £1,000-£1,500, depending on property value.
- Redemption Fee: £100-£150 to release the legal charge.
At Bridging Finance, we aim to reduce costs by facilitating joint representation for legal processes and negotiating fee-free products where possible.
Why Choose Bridging Finance?
At Bridging Finance, we specialise in guiding clients through the intricacies of bridging loans, offering tailored advice and transparent support at every stage.
Our Commitment
- Fee-Free Advice: Unlike some brokers, we don’t charge you for our guidance.
- Access to Specialist Lenders: We connect you to the best deals in the market.
- Personalised Support: From initial consultation to loan completion, we’re with you every step of the way.
FAQs
What Is the Maximum LTV for Refurbishment Bridging Loans?
Most lenders offer up to 75-80% LTV, depending on property type and condition.
Can I Repay Early?
Yes! Most bridging loans have no penalties for early repayment.
How Quickly Can I Get a Bridging Loan?
Funds can be released in as little as 72 hours, with average timescales of 3-6 weeks.
Is a Refurbishment Bridging Loan Right for Me?
If you need fast, flexible funding for property improvements, a bridging loan could be the perfect solution. Contact us today for personalised advice.
Ready to start your refurbishment journey? Contact Bridging Finance for expert guidance and tailored solutions. Let us help you turn your property aspirations into reality.