When it comes to refurbishing a property or buying a non-habitable building, bridging loans have a key role to play. Most mortgage providers are reluctant to offer funds for properties that are in a state of disrepair or mid development, which means buyers and investors need to look elsewhere.
Refurbishment bridge loans provide a short-term funding solution so works can be completed and the property then sold or refinanced, ensuring your plans remain on track
A refurbished property is a building that is being improved or updated without altering its existing structure. The main focus is on changing the aesthetic look of the internal living space, restoring its condition and appearance.
This is not to be confused with renovation, which involves updating or improving the property structure, such as installing new flooring or opening the kitchen into the dining area.
A non-habitable property is a building that is not deemed safe or suitable for people to live in due to its current condition. Investors often purchase non-habitable properties with a view to refurbishing or renovating it, before selling it on.
Housing laws, building regulations and environmental codes determine which properties are deemed non-habitable. A surveyor will take all of this into account when carrying out an inspection. If the property features major structural failings or health hazards it will usually be classed as unfit for human occupation.
Own a property that is uninhabitable or in need of refurbishment? Our free bridging loan calculator makes it easy to get some early-stage costs.
Bridging loans are often used for refurbished or unfinished properties and provided you meet the loan requirements, lenders generally see this as a valid application.
The funds can be used to provide short-term finance to bridge the gap between buying the property and making it habitable. This allows an investor to either sell on or refinance with a traditional mortgage.
Some of the potential benefits that can be gained through a bridge loan for a refurbished property include:
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David needs to refurbish a property but is unable to raise the cash through savings or other avenues. The breakdown of his current situation is as follows:
To cover the cost of the refurbishment he would need to apply for a bridge loan worth £50,000. He agreed to use a lender that offers the following terms:
This would mean the total bridge loan costs would be:
Julie owns a property that she would like to refurbish, although there is an existing mortgage still outstanding:
This means she will need a bridging loan worth £30,000 to continue the refurbishment work. Julie agreed to use a lender that offered:
The total bridging loan costs would come to:
Taking her mortgage into account, this would mean Julie’s total debt on the property is:
Some the main points to remember when looking at the pros and cons of bridging loans include:
If you own a property that has been declared non-habitable or are starting a refurbishment project, you’ll probably find it difficult to secure a mortgage to cover your upgrade costs.
Bridging loans often last for 12 months and do not require monthly payments, so you can focus on finalising the property, raising the funds and repaying the debt in a timely fashion.
The Willows team is on hand to answer any question you have about refurbishment bridge loans and can help you find a deal that works for you.
Call us today on 01656 766 158 to find out more.
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Willows Finance Limited
Brocastle, Bridgend, CF35 5AS
Authorised and regulated by the Financial Conduct Authority
Firm Reference Number: 670052
Company Number: 6678545 (Registered in England and Wales)
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Other finance options may include:
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We charge a broker fee upon loan completion. The average fee is approximately 5%, depending on your situation.
Fee details:
No refund is offered after completion. You may pay upfront or add the fee to your mortgage. Fees and commission will be detailed in your ESIS and Mortgage Agreement.
You will receive a Mortgage Agreement and an ESIS document detailing:
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Missing payments can lead to charges, repossession, and negative impacts on your credit rating.
Consolidating debt may result in higher long-term interest. Securing debt against your home increases risk.
Your home may be repossessed if you do not keep up repayments on a mortgage or other loan secured on it.
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Willows Finance Limited
Brocastle, Bridgend, CF35 5AS
Tel: 01656 766158
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After processing your application, you’ll receive a Mortgage Agreement and have a 7-day reflection period.
Contact us during this period with any questions. To proceed, sign and return the agreement.
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