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Light property refurbishment loans explained:
These loans are available for what lenders class as either light refurbishment works or heavy refurbishment works. On this page, we are going to specifically focus on light refurbishment.
Light property renovation finance is available for customers looking to refurbish a property, in order for them to then hold it as a buy-to-let investment or to re-sell in order to make an instant profit.
The main benefits are that light refurbishment loans can be provided on properties that would otherwise not be granted, due to not being in a liveable or lettable condition.
If a property requires a more substantial refurbishment, e.g. needing planning permission; a loan for heavy refurbishment can be provided.
What is a Light Refurbishment property? These usually will cost under 15% of the value of the property for example: redecorating, plastering or even fitting a new kitchen.
The simple answer is No – subject to project viability and experience; we have arranged finance for light property renovations for all types of clients.
The key question a lender asks is; is the project viable? What this means is when you factor into account the purchase price, the acquisition costs (stamp duty and legal fees), the cost of works to refurbish the property & the financing costs, does it make a profit?
If it does then lenders are very happy to provide property refurbishment finance.
Example:
The costs equal to £245,000 however, the end value of the property post works is £280,000. Therefore, the profit is £35,000 and the project is viable and suitable for a property refurbishment loan.
Some of our clients ask us this question. The answer depends on a number of factors.
Firstly, what is the condition of the property being purchased or refinanced? If it is not in a lettable condition, then a lender that offers a buy-to-let mortgage will not deem the property to be a suitable security and they will not proceed with the application; meaning there’s time and money wasted on a valuation fee, which could have cost several hundreds of pounds.
Sometimes a property is in a lettable condition but is not modernised and therefore not maximising its rental income potential.
For instance, you could secure a buy-to-let mortgage on the property but the rental income, as assessed by the valuer, comes back lower, meaning you need to put down a larger deposit than with a light refurbishment loan.
No – it doesn’t need to be perfect. Small late payments for loans or credit cards are accepted if an explanation can be provided for them.
Mortgage arrears are more serious from a lender’s perspective, but again if a solid explanation can be provided, the loan could be accepted on a case-by-case basis – subject to lender’s decision.
It depends on the type of works you plans to undertake. This page is specific to properties needing property refurbishment finance for light works. The terms “light works” varies from lender to lender but generally, they are works that require no planning permission or structural work.
Our advisers offer a free consultation, so please give us a call or use the “Get in Touch With Us” form at the end of this page
Advantages of Light Refurbishment Loans
Disadvantages of Light Refurbishment Loans
Important Information
ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
We are a credit broker not a lender.
Advocate Finance Ltd, registered at 55 Crown Street Brentwood, Essex CM14 4BD. Company Register number is 05579380. Authorised and Regulated by the Financial Conduct Authority. Our FCA registration number is 592830.
You can check via www.fca.org
We are registered with the ICO, Z1654205 and you can check via www.ico.org.uk.
We conduct both regulated and unregulated business and therefore not all products provided through us are regulated by the Financial Conduct Authority. We source mortgages and loans from a panel of lenders.
We may receive a commission that will vary depending on the lender, product, the amount borrowed or other permissible factors.
Advocate Finance is a mortgage and finance brokerage firm that specializes in securing loans and mortgages for various types of properties, including single properties, large portfolios, commercial sites, and development projects. They assist clients regardless of credit history, circumstances, or legal ownership, aiming to provide tailored financing solutions