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Works Funded Refurbishment Loans

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Works Funded Refurbishment Loans

Are you looking to refurbish a property and want a loan that covers 100% of the works costs? Continue reading to see how we could help you. Market leading bridging lenders now offer competitively low rates whilst also funding 100% of the works, allowing you to maximise the value of your property. These loans tend to be classed as heavy refurbishment loans that fall short of development finance criteria. For property investors looking for funding on light refurbishment projects read our post on Shawbrook’s marketing leading product .

Heavy Refurb and Conversion Works

Examples of works that can be funded through these products include those involving structural changes, residential or commercial conversions, internal refurbishment, or work that may require planning permission and/or building regulation approval such as extensions and loft conversions.

Example Project

Conversion of a Commercial unit into 3 self-contained flats under permitted development.

Financial Details Purchase

 

FINANCIAL DETAILS  
Purchase Price £400,000
Site Acquisition Costs (SDLT) £9,500
Site Acquisition Costs (Legal) £2,500
Build Costs £100,000
Contingency £10,000
Total Cost of Works £110,000
Grose Development Value £700,00
FUNDING REQUIREMENTS  
Period for Works (months) 6
Period to Sell/Refinance (months) 4
Day 1 Contribution from Developer £100,000
Day 1 Loan £300,000
Refurbishment Loan for 100% Build Costs £110,000
Total Facility Required (incl Financing) £438,400
FINANCING COST  
Arrangement Fee 2%
Exit Fee 0%
Interest Rate (per month) 0.80%
Arrangement Fee £8,768
Interest Cost £28,400
Total Financing Costs £37,168
PROFITABILITY AND RISK ANALYSIS  
Profit on Costs (£) £140,832
Profit on Costs (%) 28%
Loan to Value (day 1) 75%
Loan to Costs (LTC) excl Financing Costs 80%
Loan to GDV (LTGDV) incl Financing 63%

To summarise, you will need a 25% deposit on day 1 along with the stamp duty fees, legal costs and the initial funds needed to begin the works. Once the initial works are complete, the lender allows you to drawdown on the next stage of funding and this is repeated until all works are complete.  

This shows that including the interest roll up, the lender is providing an overall loan of 82% LTV. With an initial investment of £100,000 and overall profit on costs of £148,832, it shows that this strategy provides a fantastic return on investment.

To find out if we can help with your project, please get in touch  for a free, no obligation personalised quote.

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