Pre-credit crunch it was very easy to get finance from a high street bank for the refurbishment of a property that wasn’t mortgageable. The banks would offer you a percentage of the cost of refurbishment and the purchase price. After the economic crisis this finance vanished with the void being taken over by bridging financing for both light refurbishment and heavy refurbishment.
A light refurbishment is where a property needs decorating, new flooring, new bathroom and new kitchen. If there’s anything that needs planning consent or there’s a structural problem, then it’s classed as heavy refurbishment.
The definition differs from lender to lender. It could be a percentage cost like works being finished costing nothing more than 15% of the value of the property. Or where planning or structural work is required such as change of use, internal reconfigurations, loft conversions and extensions.
There are a number of different fees you will need to pay when applying for refurbishment finance.
The rates you will be paying will depend on whether you are selling your property once the refurbishment works have been completed or you are planning to keep the property post refurbishment. For light refurbishments rates can be as low as 5.5%, with heavier refurbishments having greater rates.