The Alternative Guide to a Property and House Refurbishment Bridging Loan

Property investors are always looking for ways they can generate better returns and for many, a house refurbishment bridging loan eg. buying a run-down property and renovating it to achieve a higher re-sale price or retaining the property and benefitting from increased rental income, is the ideal solution.

When it comes to financing home and house refurbishment, a bridging loan can prove a valuable tool – providing investors with the funds they need to purchase and renovate a property over a short term, before they decide to either sell the completed property for a capital gain or refinance onto a longer-term loan to let it out.

There are two main types of property refurbishment bridging loans, known as light refurbishment and heavy refurbishment.

Light refurbishment is where a loan is needed for property development where no planning permission or building regulations are required. It is possible to add significant value to a property even without significant construction work. For example, a regular mortgage lender will not lend on a property that is considered to be uninhabitable, and this will reduce the price of the property. However, it could be made habitable with a light refurbishment as common reasons for a house or property not being habitable include having no kitchen or bathroom, multiple kitchens in a single property or a surveyor having inspected the property and deemed it not fit for letting.

Where the renovations to a property require planning permission or structural changes requiring building regulations, a heavy refurbishment loan is required to finance the development. Typical examples of heavy property refurbishment include extending or converting a house or property, or changing its use from a single dwelling to multiple dwellings and vice versa. Often the extra work required for this type of property refurbishment is reflected in the additional returns that can be achieved.

At Alternative Bridging Corporation, we provide a full range of light refurbishment bridging loans for refurbishments that do not require planning permission, such as flat and house refurbishment, retail, industrial and office improvements. These types of loans can be used by investors for flat and house refurbishment, AST investments, student accommodation and HMOs.

We also offer heavy refurbishment loans, which can provide bridging finance for converting commercial premises to residential use. They are also suitable for structural reconfiguration and extension of existing residential properties for which planning permission may be required.