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Refurbishment Loans
If you are looking to fund minor, moderate, or major property refurbishments with an affordable loan, UK Property Finance can help. Our flexible refurbishment loans are suitable for all types of property development and renovation projects, starting at just £25,000 with no maximum loan size.
What is a property refurbishment loan?
A property refurbishment loan is a specialist short-term facility issued exclusively for property development and refurbishment purposes. It is a popular tool among property developers, landlords, investors, and homeowners—anyone looking to refurbish or improve a property before selling it or letting it out.
With refurbishment loans, the property owner is able to conduct renovations and improvements on any scale necessary in order to ensure the property sells (or is let out) for the best possible price. The loan needs to be repaid within the designated timeframe, typically spanning 12 months. As interest is computed on a monthly basis, you will only incur interest for the duration for which you have maintained the loan, and there are no penalties for repaying it earlier than agreed upon.
Faster to arrange and more affordable than any conventional property loan, refurbishment loans are designed specifically with short-term property renovation projects in mind.
Basic eligibility criteria
The basic criteria which applies is as follows:
- Residential, commercial property, or land acceptable as security.
- Applicants must be at least 18 (no upper age limit).
- Loans are available across the UK, including Northern Ireland.
- Applications are welcome from subprime applicants with poor credit.
- No formal proof of income or employment status is required.
- Monthly interest starts at as little as 0.41%.
- Loans starting at £25,000 with no maximum loan size.
- Available to individuals, partnerships, LLPs, Ltd. companies, offshore companies, foreign nationals, and pension funds.
In most cases, we can help all types of applicants.
How much does a property refurbishment loan cost?
Refurbishment loans are designed to meet individual needs, offering customised services with varying terms and conditions for each product.
The overall costs associated with borrowing can be impacted by various factors, such as:
- The amount of the loan.
- The length of the repayment period.
- The creditworthiness of the applicant.
- And other pertinent criteria.
A typical loan for small improvements has a monthly interest rate ranging from 0.4% to 0.6%. Loan rates for more significant renovations are often slightly higher, with interest rates ranging from 0.5% to 0.8%.
Similarly, the lowest interest rates and borrowing expenses are often available with lower LTV products (typically 50% LTV or less).
What other fees apply along with monthly interest?
All fees and charges are negotiable, emphasising the importance of working with a skilled broker. Your broker will negotiate on your behalf to ensure you get an unbeatable deal, pairing your requirements with a top-rated UK lender.
Additional fees and charges that may apply alongside monthly interest include the following:
- Lender arrangement fee: This is also referred to as a processing fee or admin fee and is charged by the lender simply by setting up and authorising the facility in the first place – typically 2% of the net loan value.
- Broker fees: It is common for brokers to charge a fee for their services. The fee that various brokers offer can vary; however, it is usually around 2% of the net loan amount.
- Valuation fee: This refers to the costs incurred in arranging a formal valuation of the property you intend to use as security for the loan. It may also be necessary to present your lender with a formal estimate of the property’s future value at the time the project is completed.
- Exit fees: Some lenders charge exit fees when the loan is repaid, which will be added to your redemption figure upon repaying the loan in full.
Key Product Features
| Feature | Explanation |
|---|---|
| Max LTV | Up to 85% |
| Interest rate | From 0.41% per month |
| Charge types | 1st, 2nd & 3rd considered |
| Term | Up to 36 months (maximum 12 months for regulated loans) |
| Interest type | Added to the loan, or serviced monthly |
| Completion timescale | 5 days – 3 weeks |
As implied by their name, refurbishment loans give landlords and real estate investors the money they need to renovate or convert a house or business facility in order to increase its worth. Loans for renovations are available to individuals, limited corporations, and sole proprietors.
Financial products called refurbishment loans, sometimes referred to as renovation loans or refurbishment mortgages, are made to finance home improvements. These loans are designed to pay for the expenses involved in making improvements to a property, whether it is being used for residential or commercial use.
Eligibility requirements for refurbishment loans are fairly relaxed. You simply need to have enough equity in your home (or business property) to cover the costs of the loan and have a viable exit strategy (how you intend to repay the loan) in place.
Yes, in the sense that it may influence the competitiveness of the loan you are offered. However, poor credit is unlikely to prevent you from qualifying for a refurbishment loan outright. If you meet the main eligibility criteria (security and exit strategy), you have every chance of qualifying.
No, refurbishment loans are open to anyone looking to improve a property for any reason, with no relevant background or experience necessary. You are simply borrowing against the equity you have built up in your property, as with any other conventionally secured loan.
With all the essential paperwork and supporting evidence in place, a refurbishment loan can be arranged within a few working days. A typical timeframe for arranging and authorising these loans can be anything from five days to three weeks. This depends entirely on the nature and complexity of the applicant’s requirements.
LTVs for residential properties are typically limited to 85% and 70% for commercial assets. You may be able to raise more by offering additional security with sufficient equity.
Light refurbishment financing concerns property improvements and alterations that are not structural in nature. Examples of these could include bathroom and kitchen renovations, refurbishment of existing rooms, and extensive decorating projects.
Heavy refurbishment refers to projects of a more structural nature, such as extensions, the removal of retaining walls, major conversions, a new roof, and so on. Heavy refurbishment projects almost always call for planning permission, whereas light refurbishments do not.
It is usually advised to use a broker, regardless of your needs. Your broker will negotiate on your behalf with a panel of licenced lenders to guarantee you an exceptional price. In addition, there are many specialist refurbishment finance companies that offer their services exclusively via broker introductions.
Working directly with a lender severely limits the options available to you and renders it impossible to access 100% honest and impartial advice.
After receiving your query, your lender will respond with a decision in principle within six to 24 hours. If you agree, we will submit your whole application for processing. The loan’s terms and conditions will then be explained in full to you.
If you proceed with the loan, you must give the lender with the necessary papers to complete the transaction. The funds will be deposited into the borrower’s account within a few business days of both parties signing the legally binding contract.
Paperwork requirements differ from one lender to the next.
You can expect to be asked to provide the following as the bare minimum:
- A completed application form with no errors or omissions.
- Details of the property you intend to refurbish.
- An overview of your current assets and liabilities.
- Information about the nature, extent, and purpose of the project.
- Timescales and cost estimates for the refurbishments.
- A formal estimate of the current and future value of the property.
- Details of your planned exit strategy.
You may also be required to provide evidence that you have obtained planning permission where heavy refurbishments are concerned.
A refurbishment loan can be taken out to enhance and improve almost any type of property. This includes residential properties, commercial properties, and semi-commercial properties in almost any state of repair.
There are also no specific limitations placed on the types of renovations that can be financed with a refurbishment loan, from simple aesthetic improvements to major structural alterations and extensions.
It can, for the simple reason that complex refurbishments that are more difficult to perform bring a higher risk of an unsuccessful outcome. This is why you will be asked to provide full disclosure of the type of work you intend to conduct, which may in turn influence the rate you are quoted.
Exit techniques provide for some wiggle room because the lender just has to know that their money will be returned. Selling the property once it has been repaired is a common example, as is converting the loan to a longer-term repayment instrument (such as a mortgage) at the end of the agreed-upon time.
If you have or anticipate having problems repaying your debt, you must tell your lender as soon as possible. If you do not pay your bills, your home or business may be repossessed. However, most lenders will make tremendous efforts to avoid repossession.
