Refurbishment Loans
Refurbishment loans is a type of short-term loan (STL) that enables light or heavy works to be carried out on an investment property. This is an ideal product for property professionals such as property developers, landlords and architects, who have the experience in delivering refurbishment projects for existing properties, or identifying new project opportunities. This product adds gross development value to the project, thereby maximising profits for the developer.
The type of refurbishment loan needed will be dependent on the type of work that is intended to carry out on the property.
Different lenders will have their own definition of what classes as light or heavy refurbishment.
Uses of a Refurbishment Loan for investment property:
Light refurbishment can include cosmetic improvements to a property, as well as smaller improvements such as rewiring, repainting or installing a new bathroom. Typically works cost less than 15% of the property value. Light refurbishments are suitable for landlords with no experience.
Heavy refurbishment consists of major structural work costing more than 15% of the property value. This work may require planning permission or involve certain building regulations. Heavy refurbishment loans are suited for landlords and property investors with experience.
The main benefit of Refurbishment loans is that the Finance can be raised quickly by investors to swiftly complete the work. This can quickly increase the value of the property which can then be sold or changed to a mortgage term facility at the higher value.