Refurbishment Finance


Loans for property refurbishment are becoming increasingly available and are now well-established method of funding for developers, investors and property owners. Refurbishment finance is most appropriate in circumstances where there are opportunities to upgrade a property, improving its condition as well as increasing its value thus increasing returns.

This finance is commonly used to improve residential properties but loans secured against commercial assets are also catered for. Unlike the funding arranged for ‘ground-up’ development, loans for property refurbishments tend to be smaller in size as typically the work to be undertaken is less and loans taken over shorter periods.

It is important that the finance you secure to fund the improvements to your property is tailored to the exact needs and requirements of you and the project in question.

Securing bespoke refurbishment loans for projects taking less than 12 months are predominantly arranged more quickly than longer-term, more complex development loans. At SPF Short Term Finance, our dedicated team of experts have decades of experience in securing the best terms and loans for refurbishing properties.

Get in touch with us today to find out more about the hassle-free finance we can secure to improve your property.

Call us – 03332 226 687

Email us –

Property Refurbishment Finance – The Benefits

Property refurbishment is a popular method of making profit from property. Improving and upgrading properties in a variety of ways including extensions, conversions, full-scale interior overhauls and basements and can add as much as 20% to the resale value of a property. In normal market conditions, you would expect the value of residential and commercial properties to rise as a direct result of refurbishment work undertaken.

Refurbishment finance arranged with SPF Short Term Finance will always be the most competitive and appropriate given your circumstances and the project at hand. Refurbishment finance enables the fast purchase of a property in a dilapidated or tired state as well as providing you with the development capital you require to realise your vision for the property.

Lenders operating in this market are specialists and are experienced in looking past the current condition of the property and instead look harder at the value of the end-product.

How do Refurbishment Loans Work?

As with other short term property finance options such as bridging or auction finance, refurbishment lenders will charge a premium for accepting the additional risk that comes with lender on a property in an impaired condition. A premium is also applied for risks including; cost overrun, construction problems or if the property fails to sell at the expected price or within the anticipated timeframe.

The sum of all this means that as with other property finance such as bridging finance for example, refurbishment finance is more expensive than traditional mortgage finance; yet balanced against the risk aversion of mainstream mortgage lenders. Many of them simply to do not permit large-scale refurbishment or secure loans on properties that are deemed uninhabitable

It can be arranged that the full amount of the loan can be released at the start of the project or alternative via staged payments as you reach milestones during the refurbishment. The latter is popular as loan interest is only charged on the amount borrowed for the duration you have borrowed it – loans arranged on a staged drawdown basis will reduce the overall cost of your refurbishment finance.

Different specialist lenders have different attitudes and processes to loan drawdown and will often be determined by the project itself or the scope of work that is proposed. It is important that you secure finance that most suits your needs and project.

Loan Fees

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.

Get in Touch for Property Refurbishment Loans

Get in touch with our experienced team today to find out more about the refurbishment loans we can secure for you. We have more than 20 years of experience in arranging bespoke property loans and have a vast network of specialist lenders.

Call Us: 03332 226 687.

Email Us:

More Information

Second Charge Mortgages