What is a Refurbishment Bridging Loan?

A refurbishment bridging loan is a type of short-term financing solution that is designed to meet the financial needs of property developers who are carrying out renovation work on properties. The finance solution can be used to bridge a gap when a developer hasn’t yet secured full funding from their bank. The process of securing development finance can often be time-consuming and lengthy, so having access to alternative financing solutions can be crucial.

Refurbishment bridging loan are often offered at a lower interest rate than conventional bridging finance. They also typically come with a shorter repayment period, which can help to make the finance more manageable and affordable. Additionally, a refurbishment bridging loan may also be available with no arrangement fee, which can help to further reduce the overall cost of the funding.

There are several factors that can influence how much a refurbishment bridging loan will cost, including the nature of the work being carried out and the amount that is being borrowed. For example, a heavy refurbishment will normally involve structural changes that could increase the GDV of a property, which will likely mean higher borrowing costs. The size of the deposit that is provided will also play a role, with larger deposits generally leading to lower borrowing costs. The borrower’s financial situation and credit history will also be taken into consideration when applying for this type of bridging finance.

Most people will use a mortgage when purchasing a property, but if you’re looking to buy a ‘fixer-upper’ that requires some work to improve it, a bridging loan may be more suitable. These types of loans are usually arranged to be paid back at the end of the project, when the property is sold or refinanced through a residential or buy-to-let mortgage. They’re often a good choice for flipping property, which can be a lucrative investment if done correctly.

Bridging loans are ideal for property refurbishment projects because they can be arranged quickly, which is important when it comes to property development. It is not uncommon for a bank to take weeks or even months to process a mortgage application, which can cause a delay that could impact your project timelines. With a bridging loan, however, you can usually receive the funds within a matter of days.

If you’re looking for a refurbishment bridging loan, speak to an expert bridging advisor at UK Property Finance today. We can provide you with more information on this type of finance, as well as a range of other loan options that may be better suited to your requirements. We can help you to find the right finance option for your property renovation or refurbishment project, with rates and terms that are competitive. To start exploring your options, get in touch with us today.