Making Light Work of Property Refurbs: The Best Way to Fund Home Improvements

Property Refurbs are becoming more popular than ever, thanks to TV shows like Homes Under the Hammer, Grand Designs, and Renovation Nation. Whether it’s giving a tired Victorian home a modern facelift or converting a rundown property into a dream space, these light refurbishment projects often require flexible and fast financing. One of the best ways to fund home improvements is through a light refurbishment bridging loan.

A light refurbishment bridging loan from Alternative Bridging Corporation can be a game-changer. It provides the short-term funding needed to complete light refurbs quickly and efficiently. Unlike traditional loans, light refurbishment bridging loans are tailored to meet the immediate needs of property refurb projects, ensuring that work progresses without delays.

Why Choose a Light Refurbishment Bridging Loan?

There are various reasons why a light refurbishment bridging loan is the best way to fund light refurbs and home improvements.  If you are looking to upgrade a buy-to-let property, repair a run-down house, or make improvements to student accommodation, this type of loan offers several advantages:

• Speed: Loans can be arranged for light refurbs swiftly, allowing projects to move forward without waiting for slow bank approvals.
• Flexibility: With loan terms between 3 and 24 months, these loans are ideal for short-term projects that need quick turnarounds.
• High LTV: With up to 70% of the Loan to Gross Development Value (LTGDV), you can leverage a substantial amount of funding based on the future value of the property post-refurbishment.
• Broad Uses: These loans can be used for a range of properties, from buy-to-let houses and licensed HMOs to owner-occupied retail spaces and residential investments.

What to Consider Before Taking Out a Light Refurbishment Bridging Loan

Before diving into a refurbishment project, there are a few things to keep in mind. It’s essential to ensure that the project is realistic and that the cost of the refurbishment aligns with the expected returns. Here’s a quick checklist to consider:

• Project Scope: Have a clear plan outlining the extent of the refurbishments needed, including timelines and costs.
• Loan Terms: Consider the length of time you’ll need the loan and whether your project can be completed within the agreed loan period.
• Exit Strategy: Have a solid exit plan in place. Whether it’s refinancing with a traditional mortgage or selling the property, lenders will want assurance that you can repay the loan.
• Interest Rates and Fees: Light refurbishment loans generally come with interest rates starting at 0.85% and a 2% arrangement fee, so ensure these costs fit within your budget.

Benefits of Light Refurbishment Loans with ABC

At Alternative Bridging Corporation, we offer light refurbishment loans that are designed to make property improvements as seamless as possible. Some of the key features of our light refurbishment loans include:

• Loan amounts from £250,000 to £3,500,000
• Competitive interest rates starting from 0.85%
• Flexible loan terms ranging from 3 to 24 months
• Available to individuals, partnerships, UK Limited Companies, and offshore borrowing entities
• First charge security on a wide range of property types

By providing a quick and straightforward financing option, ABC helps property developers and investors complete their refurbishment projects on time and within budget.

Case Study: A Light Refurbishment Loan in Barnet

In Barnet, a property owner needed urgent funding after their lender withdrew from a project to convert a clinic into a residential family three-bed home. Alternative Bridging stepped in quickly, providing a light refurbishment loan within just five working days. By reusing the property’s existing valuation and fast-tracking legal procedures, the loan was approved seamlessly, enabling the borrower to proceed with the refurbishment and plan for a post-project sale.

The Role of Development Loans in Property Projects

Development finance loans, particularly tailored products like Alternative Bridging Corporation’s Development 80, are fundamental for turning ambitious property projects into reality.

Development finance loans are specialised short-term loans designed to fund property development projects. These loans are typically used for ground-up construction, extensive renovations, or large-scale property expansions. Unlike traditional mortgages, development finance loans are structured to cover the various stages of a development project, providing necessary capital when it is needed most.

When applying for a development finance loan, it’s essential to understand what lenders prioritise and require. Here are some key factors that lenders, such as Alternative Bridging Corporation, typically consider:

A well-structured business plan:

A comprehensive business plan is a must. This document should outline the project’s feasibility, detailed costs, expected returns, and a clear exit strategy. A well-structured plan reassures lenders that the project is viable and that the loan will be repaid on time.

Developer experience and track record:

Lenders prefer working with developers who have a proven track record of successful property development. Experience reduces the perceived risk and increases the likelihood of loan approval.

Collateral:

Providing sufficient collateral is another critical factor. Lenders need to ensure that they can recover their funds if the project does not go as planned.

Understanding the market:

Having a deep understanding of the property market is essential. Lenders will assess whether the developer is aware of market trends, potential risks, and opportunities.

Exit strategy:

Making sure you have a clear and realistic exit strategy is vital. Whether the plan is to sell the completed properties or refinance them with a long-term mortgage, the lender needs to see a feasible path to loan repayment.

Project planning and presentation:

How the project is presented can make a significant difference. A well-organised presentation that clearly communicates the project’s goals, timelines, and financial projections will instil confidence in the lender.

Development 80 Loan from Alternative Bridging

Alternative Bridging offers development finance loans up to £10m, typically serving clients with a turnover between £250,000 and £10m. One of their standout products, the Development 80 loan, is designed for experienced property developers. This loan provides up to 80% of the total development cost, offering a streamlined solution for developers seeking to maximise capital efficiency.

Key Features of the Development 80 Loan:

• Loan term: 6-24 months
• Security: First charge, debenture (Limited Companies and LLPs), personal guarantee (Limited Companies and LLPs)
• Loan amounts: £500,000-£3,500,000
• Maximum gearing: 80% Loan to Cost (LTC), 70% Gross Development Value (GDV)
• Target projects: Residential development projects within a 200-mile radius of London

The Development 80 loan simplifies the financing process, offering one competitive interest rate without the need for mezzanine financing. This reduces professional fees and provides a cost-effective solution for developers.

Checklist for Securing a Development Finance Loan:

• Assess project feasibility: Ensure your project is realistic and achievable within the proposed budget and timeline.
• Prepare a detailed business plan: Include all relevant financial projections, costs, and a clear exit strategy.
• Gather required documentation: Have all necessary paperwork ready, including proof of experience, collateral details, and market analysis.
• Understand lender requirements: Familiarise yourself with the specific criteria of your chosen lender, such as loan size and maximum gearing.
• Present your project effectively: Organise your project details in a clear, professional manner to instil confidence in potential lenders.

Case Study: Development Finance Kent Auction

A longstanding client of Alternative Bridging Corporation identified a well-located office building in Kent, with plans to convert it into residential units, but required urgent financing. Alternative Bridging Corporation stepped in with a Development 80 loan, allowing the client to complete the auction purchase. The Development 80 loan was provided at a competitive rate, with stage payments structured to fund the entire conversion process. This enabled seamless progress from purchase through to the completion of the residential units.