Bridging for Refurbishment

Fund the purchase and the works in one facility — then exit to a sale or refinance at the improved value.

A refurbishment bridge funds the purchase or refinance of a property and the cost of the works in a single facility — with most lenders covering up to 100% of refurbishment costs, drawn down as the work completes. It is the standard structure for investors buying at auction, repositioning rental stock or adding value ahead of a sale or refinance.

Refurbishment bridging at a glance

Day-one advance: most lenders work to around 65–70% of the property's current value or purchase price; some will stretch to 75% or 80%, and pricing rises with the leverage.
Works funding: up to 100% of refurbishment costs in almost all cases, released in tranches against completed work.
Interest: charged only on funds drawn — not on the full facility from day one.
Light and heavy refurbishment are underwritten and priced differently, so the distinction matters before you approach a lender.
Lender coverage: we place refurbishment bridging across 135+ lenders.

How a refurbishment bridge works

The product is a close relative of the standard bridging loan, coupled with a works facility. The day-one loan either funds the purchase or replaces your existing lender if you already own the property. The works facility sits alongside it: the lender sets aside the agreed refurbishment budget and releases it in stages as the project progresses.

Funding is drawn in arrears. You pay for a tranche of work, return to the lender with invoices, and the cost is reimbursed; then you move to the next stage. If there is £50,000 of work to do, the lender reserves £50,000 for you — but if you draw £10,000 every two months, you pay interest only on what you have drawn, for the remainder of the term.

If you hold a portfolio with available equity, a cross-charge over other properties can raise the day-one advance beyond the standard level.

Light or heavy refurbishment?

Be clear which side of the line your project sits on, because the two are priced differently.

Light refurbishment is cosmetic: carpets, a new boiler, a new kitchen or bathroom, decorating — nothing structural. These products are cheaper, because the work turns around faster and a part-finished light refurb is straightforward to resell.

Heavy refurbishment is structural: altering internal walls, adding an extension, converting a loft. It is priced slightly higher because the lender carries the risk of a project abandoned part-way through — an unfinished structural job is far harder to dispose of.

Lending against the end value

The number a lender keeps returning to is the gross development value — the GDV. Buy a property for £100,000 and spend £50,000 on works, and the finished asset needs to be worth meaningfully more than £150,000; at that figure you have created no equity. If it comes out at £200,000, there is a clear margin — and a project with visible profit is easier for a lender to price competitively.

Who refurbishment bridging is for

Most residential and buy-to-let mortgage terms prohibit works to the property during the product term. Minor updates rarely attract attention, but a project of any substance — particularly one that takes the property out of the rental market, or requires you to move out — needs the right structure. A bridge lets you take the property apart and put it back together in a much better state, then exit to a sale or a term refinance.

Typical borrowers are auction buyers, landlords repositioning stock, and investors adding value before refinancing onto a buy-to-let product. With private rented lettings required to reach EPC C by 2030, refurbishment finance is also increasingly used to fund energy-efficiency works across portfolios.

What it costs

Day-one leverage drives the pricing: the more of the property's value you borrow, the more it costs. Monthly interest on refurbishment bridging has generally sat between 0.5% and 1% per month, with your credit profile, the property's condition and its location all feeding in — rates move with the market, and we quote against your actual case rather than a headline figure.

Drawdowns should be priced at the same rate as the day-one loan, and interest runs on each tranche only from the point you draw it — you pay for what you use, not for the facility limit.

On heavier projects the lender will instruct a surveyor — or, for structural work, a structural engineer — to inspect before releasing each tranche, confirming the work is being done to the required standard. These visits typically cost a couple of hundred pounds a time, and the monitoring costs are set out at the point of financing, so there are no surprises mid-project.

The process

Applying works the same way as any bridging loan; what differs is lender selection. Some lenders simply understand refurbishment better, and some will give you more leverage against the asset. Come to us with the project: what the property is worth now, what debt sits against it, the works budget and the expected end value. From there we narrow the field across 135+ lenders and place the application with the one whose criteria and pricing fit the deal. Call 020 7126 8574 to talk a project through.

Refurbishment bridging FAQs

Can I refurbish a property under my existing mortgage?

In almost all cases, residential and buy-to-let mortgage terms say you cannot carry out works during the product term. In practice lenders rarely pursue minor cosmetic updates, but for any substantial project — and certainly anything structural — a refurbishment bridge is the correct vehicle.

How much can I borrow?

Typically around 65–70% of the day-one value — the purchase price, or the figure needed to redeem your existing lender — plus up to 100% of the refurbishment costs in almost all cases. Higher day-one leverage is available at a price, and cross-charging other properties with available equity can lift it further.

Do I pay interest on the whole facility from day one?

No. Interest is charged on the day-one loan from completion, and on each works tranche only from the point you draw it. An undrawn works facility costs you nothing in interest.

How do I repay a refurbishment bridge?

Through the exit agreed at the outset: a sale of the finished property, or a refinance onto a term product at the improved value if you are retaining it.

What return should the project make?

The uplift in value should exceed the cost of the works plus the cost of the loan — otherwise you have refurbished for nothing. If you are retaining the property, look at yield as well as capital growth: a property yielding 8% or 9% will make its return, whereas in the south and south east yields run lower regardless of what you do to the asset, so the case rests more heavily on the capital uplift.

What goes wrong on refurbishment projects?

Underestimating the works. A common pattern is buying at auction, starting the refurb and finishing with a build cost well above the uplift in value. Understand the numbers before you commit, and get solid, itemised quotes from a builder you trust before approaching a lender.

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To put numbers to your own scenario, use our bridging loan calculator — it estimates interest, fees, net advance and LTV.

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Full transcript — “Bridging for Refurbishment ”

Recorded March 2023. A conversation with Scott West of Propertyze, transcribed in full. 9 minutes · approximately 1,798 words.

Read the transcript

Hello and making his return to the Bridging Finance podcast is Scott West from Proper Ties to explain how bridging for refurbishment works. Great to chat with you again, Scott. How are you? Very well. Thank you very well. I'm looking forward to doing this one. Good, good. Okay, let's get straight into it then. So first of all, what is a refurbishment bridging loan? So how does it all work? It's a very similar product to the original bridging loans you have seen before. This one just is coupled with some additional finance. So bridging for refurbishment, most people will use it to buy an asset, maybe at the auction finance, or maybe they've got a property that they already own, which is just tired and need some work during the day. They've

got varying levels of refurbishment they want to do. So the bridging lender will give you a day one loan to either replace your existing finance lender if you've got a term loan, if you buy it at an auction or you buy it just generically off from an estate agent. The day one loan is your loan to purchase. 65% is a traditional loan to value you'll expect. There are some that go to 75, some will even go to 80. There is a cost associated with that. The more you want, the more it's going to cost, so do bear that in mind. And again, we can cross charge. So if there is properties you want to use, an equity you want to use from your portfolio, I should say, we can incorporate that in and get a much higher loan to value for a day one. Once you've purchased it, the refurbishment

part of that loan is then the key part for today's discussion. So whether you're doing a light or a heavy refurb, a light refurbishment would be carpets, boiler, kitchen bathroom, recurating, nothing structural basically. And if the short structure would come with the light, those products are determined to be cheaper and you're usually going to turn those around in a much quicker timescale too. A heavy refurbishment would be structural. Whether you're changing internal wall structures, extension, loft conversion, those sorts of things would become structural. A heavy refurbishment product. And those are priced slightly higher just because there's a risk of, if you walk away helping through the product, the lender

has to finish the property. Whereas a light refurb, if they have to finish it, there's much less for them to do to resell that property. So the more you do, the heavier the risk is for the lender and then the rate reflects that accordingly. Right. Okay. So a clear breakdown there. That all makes sense. And just following on, and again, you've probably touched on this there, but who is a refurbishment to Priting Loan for? Anybody that wants to do any work to that property essentially, most people don't really read the terms and conditions for their term lender, your residential lender in your home or your buy-to-let lenders. But the terms and conditions for those, in almost all cases, will say that

you cannot do any works to the property inside the term of the product. So if you do want to rip out the kitchen or the bathroom, technically you shouldn't do that for most lenders inside that product. Most people do and it's not a problem. Lenders don't really fuss about it. But for those people looking to really make increased gains to the value of those properties, they need to kind of take the property out of the rental market for a while or move out of their own homes if that's what they're doing. The property is going to be uninhabited for some time. These products are ideal for that. It allows you to really get in there, tear the property apart, put it back together again in a much more, in a much better state.

Right. Okay. And then moving on, people would like to know how much can I borrow when it comes to bridging for refurbishment? I mean, the borrowing question is popular sort of on all episodes, really, isn't it, Scott? It always comes down to money, right? People want to know what they can get. And it's an important question. So how much can I borrow? I mean, as I said, generally speaking, probably 65 or 70% of your day one loan, which is either your purchase if you're buying it or to replace your existing lender. And then when it comes to the refurb costs, it's 100% of your refurb costs in almost all cases, unless the numbers are very unusual. So if you've got 30, 40 grand of work you want to do to the property or more, if it's a heavy refurb, the lender will cover all of

those costs. So every month, every two or three months, depending on how you want to break down the loan, you pay for the works. And every few months you get back to the lender and you say, here's an invoice for the work I've done so far. Can I have the refund, please? And they cover the cost of your invoice and you go and do the next tranche of work to the property. So they cover all your costs in arrears for the refurbishment. And of course that is stacked up. So you pay interest on those drawings as you draw them down through the loan. So a factor to consider on that is the gross developed value, the GDV. So if we have a property that you've purchased for a hundred thousand pounds and you plan to do 50,000 pounds worth of work to it, the property

needs to reflect a decent value afterwards. If you have a property, you're going to put 50 grand worth of work into, but it's going to be valid at 150. You've not really created any equity, but if after that 50 grand worth of work, the property is worth 180, 190, 200, there's a clear profit margin and that makes the numbers much easier for a lender to swallow and for them to understand the price, price the product. Okay. So that all makes sense as well. And actually the next question asks how much do refurbishment bridging loans cost, but you've sort of covered costs there. Are there any others that we need to know about? The costs are very similar in terms of the pricing. The higher the lender value on the first, on the day one,

will reflect your pricing between 0.5 and 1%, depending, you know, those varying factors, your credit, the property state and location is one thing. But that's your day one. Your drawdowns then should be priced at the same rate as your day one loan and they are paid as you draw them down. So they'll give you a facility. So if in the example I gave before, there's 50,000 pounds worth of work to do, they will set aside 50,000 pounds and hold it on account for you. As you draw down those monies, if you draw 10,000 pounds a month every two months, then as that goes into the drawings, you'll start paying interest on that for the rest of the term. So you only pay for what you use and it kind of accrues the rest of the term as the original

day one bridge would have. But things to consider, some lenders, depending on the level of work, will want a surveyor to come out. So if you're doing heavy refurbishment structure, before they release some tranches, they will want a structural engineer or one of their own surveyors to come and see the work, check it's been done and been signed off to a certain standard before covering that cost. So those surveyors and stuff can cost a couple hundred pounds of time. So it's a cost to consider, but that would obviously be outlined when the terms were provided at the financing point. Right. Okay. So a few things to bear in mind there. And then just lastly, really, how do I apply for a refurbishment bridging loan?

The same way as any other bridging loan, really, they all come under the same umbrella, but some do some things better than others. So for the refurbishment lenders, there are some that we'll go and see that we'll just have a better understanding or will perhaps give you more leverage against your property. So come to us with your project. If it's a project you're looking to do, if it's a project on an existing security, come to us, explain what you're trying to achieve, explain the numbers, what it's worth now, what the debt currently is, what the expected end value is. And once we've got those details, we can really then start to narrow down on best lender choices for you and then make the application recommendation.

Okay. And then is there anything else we need to consider, Scott, or do you think we've pretty much covered all that we can here? Refrebishment one is a fairly simple process, but the biggest one to really consider when you're doing these or considering these sorts of projects is the total GDV or the yield. So those are really big, important factors because you're looking to retain a property, then maybe it's overall profitability growth, on its true value, its capital growth, doesn't need to be as high if the property itself is going to yield 789%, you'll make your return. But if you're in the south or southeast, your yield is going to be low regardless of what you do with the property. So you need to consider,

if I'm putting in this much work and how much money am I going to make on top, ideally you want to be making a return or growth in that property higher than the cost of the building works and the loan cost as well. So it's really important to understand the numbers beforehand because a lot of people go into these auctions, buy properties, start the refurb, and by the time they finish, they've put far more work into it than they expected, and they've come away with the build cost far higher than the actual uplifted value. So understanding your numbers, having a good builder that can give you good quotes, solid quotes upfront is also a really important factor. Okay, so some really good key points to take away from the episode there. Thank you

for that as always, Scott, and I'm sure we'll speak to you again on the podcast soon. Thank you very much.

This is a transcript of a spoken conversation recorded in March 2023, published as recorded and lightly corrected for names and technical terms only. It is general information about how this type of lending works, not advice on your circumstances. This recording is more than eighteen months old. Any rates, fees, loan-to-values or criteria mentioned reflect the market as it stood when this was recorded and are not current pricing and not an offer of finance — for today’s figures, speak to an adviser.

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