Refurbishment finance
Refurbishment finance
Written by Chris Canham, commercial finance broker with nearly 30 years in financial services. Last reviewed .
Funding for the works as well as the purchase, released in stages against progress on site.
What it is
Light refurbishment, heavy refurbishment, and the line between.
Light refurbishment is cosmetic and non-structural: kitchens, bathrooms, rewiring, decoration, with no planning permission and no building control sign-off on structural work. Heavy refurbishment involves structural alterations, extensions, change of use or works that need planning consent. Lenders care about the distinction more than most borrowers expect, because it decides which lenders will look at the case, how it is priced and how the works money is released.
Works funding is rarely advanced on day one. The lender advances a proportion of the purchase price at completion, then releases the works budget in stages, in arrears, once each stage is done. On heavier schemes a monitoring surveyor inspects before each release; on lighter works a lender may accept a desktop review or a photo-based inspection.
Interest is normally charged only on funds actually drawn, so an undrawn works budget does not cost you interest while it sits waiting. Lenders expect a realistic contingency built into the schedule of works, and they will look closely at whether the budget, the timescale and the end value hang together.
Use cases
The work these facilities fund.
Cosmetic refurbishment
Kitchens, bathrooms, rewiring and redecoration on a tired but structurally sound property – typically funded on a light-refurbishment bridge with a quick inspection-based drawdown.
Structural works
Removing walls, underpinning, roof replacement and anything requiring building control sign-off. Lenders want a costed schedule of works and, usually, a monitoring surveyor.
Loft and rear extensions
Adding floor area under permitted development or full planning. The lender will check the consent route before it lends against the uplifted value.
Conversion to HMO
Reconfiguring a family house for room-by-room letting, including fire safety, room sizes, licensing and – in Article 4 areas – planning permission.
Commercial to residential
Permitted development and full-planning conversions. Past a certain scale the lender treats the project as development rather than refurbishment, and the terms change with it.
Refurb-to-rent
Works funded on a bridge, then refinanced onto a buy-to-let or commercial term loan once the property is finished and let.
Key criteria
How these facilities are usually structured.
| Measure | Typical position |
|---|---|
| Day-one advance | A proportion of the purchase price, set by the lender and the scheme |
| Works funding | Released in stages, in arrears, against completed work |
| Maximum loan to GDV | Capped by reference to the end value, lender-dependent |
| Drawdown frequency | Staged, against inspection or monitoring surveyor sign-off |
| Interest treatment | Charged on drawn funds only |
| Term length | Short term, sized to the programme and the exit |
The works schedule and your track record move these numbers more than the property does.
Go deeper
Where refurbishment sits between bridging and development.
Refurbishment finance sits between bridging and development. Light refurbishment is priced and structured like a bridge. Heavy refurbishment – structural work, change of use, planning-led schemes – starts to look like development finance, with a monitoring surveyor, staged drawdowns and a loan sized against the end value. Read both guides to see which side of the line your project falls.
Questions
The things people ask first.
Got a schedule of works and a target valuation?
Send the purchase price, the works budget and the expected end value, and you will get an indicative structure back.
We aim to respond the same working day.
Or book a 30-minute call at a time that suits you.