Arrangement Fees – These fees are charged by the ender and are an initial cost to cover the arrangement of the loan for the borrower. These fees tend to be round 1 – 2% of the overall loan value and can be added to the loan.
Valuation Fees – Lenders will instruct a surveyor to fully value the property in question both the value in its current state as well as an estimate of end value. It is common for valuation fees to be negotiated and determined by a combination of the value of the property and the schedule of works.
Typical professional valuation fees would be around 0.25% of property value.
Exit Fees – Some lenders charge these fees at the end of the loan term and others do not charge these at all. Exit fees will typically be a percentage of the entire loan value or of the Gross Development Value (GDV).
What tends to be typical, whether exit fees apply or not, is the overall cost of the loan tends to be similar. A good adviser will compare different products and their costs for you so that you can make an informed decision that best suits you.
There are two main classifications of renovations when it comes to applying for refurbishment finance. These classifications are linked to the scope of intended works and will lead a lender to classify your project as either light refurbishment or heavy refurbishment.
The definitions of these can vary from lender-to-lender, loan costs for heavy refurbishment projects tend to be higher therefore it is important that you select a lender that correctly classifies your project.
Light Refurbishments – These types of refurbishments are those where no Planning Permission is required and the general use and nature of the property in question is unaltered. Works of this nature will include new bathrooms, kitchens, decorating, electrical work and new windows.
Heavy Refurbishments – These types of works change the nature or use of the property and will require Planning Permission and will need to strictly adhere to Building Regulations. Therefore, they will often entail more work and will be more complex than light refurbishments.