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Refurbishment bridging loans fulfill funding requirements for a specific purpose, that is, refurbishment of a property. In other words, you can call it a renovation bridging finance. It can be a commercial or residential property. The loan interest rate starts from 5.5%. However, the property market is volatile. There can always be changes in the minimum and the maximum. Usually, 75% of the property value can be obtained as refurbishment bridging loans.
These are not the only facts you should know about it. There are other aspects as well that you should be aware of. TheBusinessFunds is one of the most responsible commercial refurbishment bridging finance brokers in the UK, helping you find the right lender for your refurbishment requirements. Before that, we prefer to enlighten people about a loan product. It is because we want them to choose the right lending option. Apply right now and let’s talk more about it.
Two kinds of refurbishment activities divide the process into light refurbishment and heavy refurbishment.
| Light refurbishment | Heavy refurbishment |
|---|---|
| When refurbishment includes light work like changing fitting and fixtures, flooring, and paint only, it is the light refurbishment. | When the refurbishment involves any structural changes or anything that needs planning permission to match building regulations, it is heavy refurbishment. |
| The usual cost of light refurbishment is under 15% of the total property value, unlike heavy refurbishment. | In this type, the cost of construction or reconstruction usually goes higher than 15% of the overall property cost. |
A refurbishment bridging loan offers the required financial support to transform a property for a better look. Renovation is another word used for the refurbishment. The primary aim of a refurbishment is to make a property more functional. For this purpose, a bridging loan for renovation and improvement projects is a dependable choice. Depending on the use of the property after renovation, there are two varieties of refurbishment bridging loans. One is commercial bridging refurbishment loans, and the other is residential refurbishment bridging loans.
Commercial refurbishment bridging loans
It is during the property used for commercial purposes after refurbishment such as café shop, office etc. Also, when developers refurbish a property to sell or rent it out, it becomes a commercial refurbishment bridging loan.
Residential refurbishment bridging loans
When a property owner needs to sell or rent or make it more functional for his own use.
Mixed-use refurbishment bridging loans
A loan-obtained property that applies for both commercial and residential purposes belongs to this category. Example – A flat above a / restaurant/ shop etc.
The lending criteria can change depending on the type of loan. The calculation of interest rates, repayments, duration etc., can be complicated. Even more complicated can be the selection of redevelopment bridging loans in the UK. This is where you need help of a business loan broker. If you are planning to work on a refurbishment project, TheBusinessFunds can help you get the right loan type with affordable rates. Still, there is a general criterion to qualify for secured or unsecured bridging loans.
Despite the varied types of bridging loans for property refurbishment, there are general requirements you need to fulfil to apply. Make sure you have the following documents and details. Once you choose the lender from our suggested ones, you will need to forward all relevant information.
Property-related information that is necessary to provide is -
Personal and professional information the applicant needs to provide is -
What is an Exit strategy?
The exit strategy is your plan to pay back the loan completely. The refurbishment lending companies are always keen to know whether you can pay back the obtained funds or not. The property valuation can be an important factor in the exit plan. Those who sell or rent out the property can explain how successfully they can handle the repayments.
Many factors are significant in the interest rate of a refurbishment bridging loan for a business. A bridging loan calculator is usually the primary tool for the lenders. The following factors are taken into consideration to calculate the rate of interest.
The more sincerely you work on the following factors, the better the deal will be on the affordability part.
Did you know?
Bridging loans for refurbishment have a fixed interest rate. It means the same rate will be applicable throughout the tenure. Only a slight difference can happen depending on the base rate of the Bank of England.
Refurbishment loan interest rates Vs mortgage rates - Which one is higher?
Considering the fact that a renovation and redevelopment bridging loan is a type of short-term business loan, we can say that the loan has a higher interest rate. On the other hand, the mortgage is for quite a long period. This also means that at the end of the tenure, you will end up paying a much higher amount than what you have borrowed. This also happens due to the interest rate. In the case of a traditional mortgage, the repayments of the first few years have a bigger share of the interest rate. This is why, even after paying the instalments for a long time, you cannot see any considerable reduction in the total loan amount.
Well, there can be several rational factors to prove that choosing a broker is a better option than choosing a lender. TheBusinessFunds is a synonym for a good experience for its customers. We bring the best bridging loan deals for your property refurbishment requirements. Why wait for more? If you are looking for a pragmatically profitable deal, then you should consider the following points.
