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Many property investors in the U.K buy a property that is run down and renovate it to make a profit. 

Typically the people involved in this type of business will buy properties under market value from estate agents or via auctions, spend some money to refurbish and renovate and then look to make a substantial profit. 

The business is very profitable for those that are involved in it and know what they are doing and have the finances to do it.

How to Get The Finances for Renovating Properties for Profit

Using your Own Money

You can use your own finances if you have the money available and many developers do run their business this way. But if you dont have liquid cash then you need to look at some other options.

Renovation Mortgage

There is the option of getting a renovation or refurbishment mortgage; the loan is designed for properties requiring some renovation. You can get up to 75% LTV post refurbishment on this. 

It is worth noting that many high street lenders will not lend if the property is derelict, uninhabitable (no bathroom or kitchen working) or in need of conversion.

Also, the downside to a renovation mortgage is they can take longer to obtain due to the process, which is not ideal when fast capital is required for a below value property.

Releasing Money from Your Home

This is another option, but it is not always feasable when money is required quickly. After all you have spotted a bargain and you have a few weeks to close on it. In this scenario it may not be an ideal solution. Also think if there was a problem and you had to back away from the deal. It can get messy.

Bridging Loan For Property Renovation:

The option you have is a bridging loan, bridging loans are an ideal solution for renovation properties because the loan is short term and flexible. The lender is willing to take the risk as he has security against the loan. 

The loan can get you significant amounts of capital in a short period; this can be beneficial when there is a shortfall in funding for your project, and finance is required quickly such as an auction property.


Typically, bridging loans have a higher interest rate due to the higher risk that they hold. 

They are perfect for fast renovation projects because a bridging loan raises the capital in days (rather than in weeks like a residential mortgage period), allowing you to purchase the property and fight off your competition by being quick and on the go.

As mentioned, a residential mortgage requires the lender to value the property first, resulting in delays that may lose you the property for being slow.

Bridging loans are always going to be more expensive then a mortgage thats because they are much riskier for a lender, but you can always have the interest rate deferred and pay at the end.

As a property developer, your goal is to only borrow what you need and no longer than you need it, so that you can save on the interest fees that are apppliied on the loan. Bridging loans carry a monthly rate and if you pay it off earlier you are likely to save yourself alot of money.

A Bridging Loan Can Be Used For:

• Auction property purchase

• Commercial property development, 

• Residential property refurbishment and 

• Conversions,

• Self-build development, 

• Land purchase

• Securing renovation finance for a quick sale

• To refurbish a property considered uninhabitable. 

A bridging loan is a an ideal option than a residential mortgage in these cases. This is because a bridging loan takes into consideration the potential value of the property, rather than the purchase price that a residential mortgage considers.

The bridging loan, therefore, does not restrict the rate of property development.

When obtaining a bridging loan for renovating a property you must be clear on your exit strategy. the lender will need to know your plan of exit, whether that be to find long term finance at the end or to sell and make a profit to repay the loan.

Types Of Bridging Loans for Renovation:

• Light-refurbishment bridging loans

• Heavy-refurbishment bridging loans

A light-refurbishment bridging loan has a slightly lower interest rate and is designed for smaller development projects. 

A light refurbishment bridging loan features will include:

  • Building regulations do not apply
  • No planning permission
  • The nature of the premises will not change

Heavy Refurbishment Bridging Loans Feature:

  • Structural amendments will be needed
  • The development costs are more than 15% of the value
  • Building regulations apply
  • Planning permission is required

For more information on bridging loans and applying. Contact Property Finance Partners. 

Property Finance Partners has vast experience in the bridging loan sector and are experts in property finance. We can advise the best the best finance facility for your project as we deal with many finance facilities for the property sector. Call us today for free advice 020 3393 9277

Get more information from Property Finance Partners. Call 020 3393 9277

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