If you’re an investor, developer or property professional planning a major renovation project, whether it’s converting a run‑down property into flats or undertaking a structural overhaul, a heavy refurbishment bridging loan could be the finance solution that makes it all possible. These specialised short‑term loans bridge the gap between purchase (or existing equity) and long‑term funding or sale, unlocking projects that traditional mortgages simply won’t touch.
What is a heavy refurbishment bridging loan?
A heavy refurbishment bridging loan is a type of short‑term finance used to fund significant works on a property, especially where structural changes are required or the cost of works exceeds a certain proportion of the property’s value. Typical projects include:
- Loft conversions, extensions or underpinning
- Structural reconfigurations
- Conversions (e.g. single dwelling into multiple units)
- Commercial‑to‑residential conversions or large HMOs
These are projects where the property would not be mortgageable in its existing condition, and a standard mortgage lender would usually walk away.
Why choose heavy refurbishment bridging finance?
There are three main reasons investors turn to this type of finance:
1. Quick access to capital
Bridging finance can often be arranged faster than a traditional mortgage, with funds available in a matter of weeks. This is essential for auction purchases or time‑sensitive deals.
2. Flexibility around works
Many lenders will release funds in stages once certain milestones are met, especially for heavy refurbishment where work is complex. This staged drawdown approach means you can manage cashflow while getting on with your project.
3. Unlocking value before long‑term finance
Once the works are complete and the property is mortgageable, you can exit the bridging loan by refinancing onto a long‑term buy‑to‑let or commercial mortgage, or by selling on for a profit.
Understanding heavy refurbishment bridging loan rates
Because heavy refurbishment bridging loans carry more risk for lenders than light refurbishments or standard bridging loans, the heavy refurbishment bridging loan rates are typically higher. They’re usually quoted on a monthly basis and depend on factors like loan‑to‑value (LTV), your experience and the type of exit strategy you have in mind.
As of the latest market data:
- Competitive monthly rates can start from around 0.60% – 0.75% on lower LTVs, rising to around 0.85% or more at higher LTVs.
- Some lenders also offer products where valuation requirements are reduced or desktop valuations are used, speeding up completion.
Costs and fees to expect
In addition to interest, bridging loans come with a range of fees that should be factored into your calculations:
- Arrangement fees: Typically 1–2% of the loan amount.
- Valuation fees: Based on the property’s condition and complexity.
- Legal fees: You’ll often pay both your solicitor and the lender’s solicitor.
- Monitoring fees: For heavy refurbishment, lenders may require site inspections as funds are drawn down.
These can add up, so it’s wise to build them into your project costs from the outset.
How to work out the numbers
Before committing, you should run the figures to see how the loan will impact your overall return. A heavy refurbishment bridging loan calculator can be invaluable here, letting you estimate interest costs, overall repayments and the amount you’ll need to refinance or sell for at the end of the term. Just remember that any online tool is illustrative only; because bridging finance is highly bespoke, rates and fees will vary by lender and project.
Is a heavy refurbishment bridging loan right for you?
If you’re planning major construction or structural work that will significantly increase a property’s value, and you have a solid exit strategy, a heavy refurbishment bridging loan can be a powerful tool in your funding arsenal. They give you the capital and flexibility to transform properties that traditional lenders won’t touch, and can be the difference between walking away from a dream project and bringing it to life.