What is a refurbishment bridging loan?

what is a refurbishment bridging loan
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    Whether you are property investor, landlord or developer, a bridging loan can give you the finance you need to refurbish or renovate before letting or selling it on.

    A refurbishment bridging loan is a short-term loan used to finance the costs of renovating a building or property. It is secured against an asset, usually the property itself, and can be used to cover both internal and external renovations.

    At One Commercial Loans, we believe in expert advice delivered with transparency. This guide will present the key features of property refurbishment finance and whether it is the right choice for you. 

    What is refurbishment finance?

    Refurbishment finance is a type of property finance, specifically for funding a property purchase along with any renovation and refurbishment work needed, or to fund just the work itself. These are categorised as light refurbishment and heavy refurbishment and can be taken out for works on residential or commercial property.

    These loans come in two forms; first charge and second charge. A first charge is the principal loan on the property. A second charge is for borrowers who need further funds in the short term for the purpose of refurbishment, but have already have a mortgage secured against the property.  

    Unlike a traditional mortgage loan, the process for refurbishment finance is much quicker. This means you can raise significant funds quickly (sometimes in less than a week) and swiftly bridge the funding gap in your refurbishment project.  

    The loan is paid back either on the sale of the property or by refinancing it through a mortgage. This is your exit strategy and lenders will want this presented before financing is agreed.

    How does refurbishment finance work?

    Finance is taken out against a form of security, most commonly a residential property with equity. The agreed loan term will depend on the type of works being carried out and the type of loan (heavy or light refurbishment). The loan period can range anywhere from 6-24 months, allowing the refurbishment to be completed.  

    Interest on the loan can be paid monthly (serviced), deducted from the loan facility or deferred until the end of the term. When the property is sold or refinanced, the loan is paid back.  

    The best way to get to grips with refurbishment loans is to speak with one of our accomplished brokers.  

    What can a refurbishment loan be used for?

    Refurbishment finance can be used on both residential and commercial properties. There is a pretty big scope of what the loan can be used for and it will also depend on whether it is a heavy or light refurbishment loan. Here is an outline of how you may use this type of financing: 

    • Minor cosmetic work: this includes refurbishing the property with small changes such as redecorating, a new kitchen or bathroom, or any simple improvement to an existing structure. 
    • Installing new windows  
    • Plumbing and drainage works 
    • Electrical works  
    • Installing heating systems  
    • Basement conversions
    • Conversions (including change of use conversions) 
    • Extensions  
    • Major structural changes from commercial to a residential property  

    The work you wish to undertake will determine which kind of refurbishment finance you need.  

    Difference between refurbishment finance and development finance

    There are three key aspects that present the differences between refurbishment finance and development finance:  

    The Level of Work Being Completed  

    Refurbishment works on a much smaller scale, anything from basic redecorating, replacing fittings such as kitchens, or the renovation of structures that usually do not require planning permission. We will take a closer look at this shortly. 

    Property development finance is suited to ground-up projects or large extensions and development that require building regulations, planning permission or other permissions. Development finance may also be used to purchase a plot of land for development.  

    The Value of the Loan  

    Development loans are generally much larger as they are intended to fund bigger projects. Refurbishment loans are appropriate for smaller renovations and, therefore, lower value.  

    The Loan Period  

    The works that are appropriate for a refurbishment loan are generally completed much quicker than a full-scale development; as a result, the loan periods tend to be from 6 months to a year.  

    Unsure what kind of loan you need? Our expert brokers can advise on the correct kind of financing for your venture.

    Get in touch with us to discuss a refurbishment loan for you

    There is nearly always money to be made in property renovations, but having access to fast funds is often a major stumbling block.

    Applying for a bridging loan with One Commercial, however, is quick and easy, and we will ensure that we are by your side throughout your property project journey. To get your renovation project underway fast, contact our team of professionals today.


    Bridging loans for refurbishment are a popular choice for property developers as they can provide a substantial amount of finance within a short timeframe. If you have a shortfall in funding and are looking to ‘bridge the gap’, then this type of loan could be perfect for you.

    Picture of Mark Piper
    Mark Piper

    Mark is the senior advisor at One Commercial Loans and has a wealth of experience in bridging and property finance.

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