When purchasing properties, either as an investment or for residential use, considerable refurbishment could be required.
This might be to match your current tastes when it comes to interiors, or it may be improving things such as the space with extensions or adding other rooms to make the property more liveable or more valuable ahead of selling.
But to do all of that, you often need additional funds, and this is when a refurbishment bridging loan could be useful.
When a refurbishment bridging loan could prove useful?
A refurbishment loan could prove to help you on those necessary repairs and home improvements. Some of these improvements include things such as extensions, where you may add to size of your property. It might be that you add on bedrooms, extend into attic space or make use of basements and create new rooms that can be utilised.
Refurbishment doesn’t always mean that you are going to be adding to the property, you can also look at things such as improvements inside the home. This might be new wiring and electrics, making the home more energy-efficient or taking advantage of smart technology. It might be that you want to improve the condition of some of the more used rooms in the home, such as a new kitchen or bathroom.
All of these things improve the property and add value so if you’re looking to refurbish and sell the property once the work is completed, a refurbishment bridge loan could be appropriate.
Bridging loans typically don’t require monthly repayments. Instead, the interest is ‘rolled up’ and paid off at the end of the term (usually around 12 months). This is ideal as, without monthly repayments, your cash flow isn’t negatively affected by having to make loan repayments. Instead, both loan and interest are paid off at the end.
Is there a lengthy application process?
As a refurbishment bridging loan is planned for short term use, the application process isn’t as lengthy as you might think. The idea is that the loan itself bridges the gap in funding to help you to get to the stage where you need. Initially, you will have purchased a property with a mortgage, and the refurbishment bridging loan will bridge the gap between what the house is currently worth, and what it may be worth once certain works are completed.
This enables you to then obtain the finance to do the work, and then ultimately be able to pay the loan back within a short timeframe. This is why a refurbishment bridging loan can often be a great choice for developers or people who have bought a property with the intention of making those home improvements to increase the overall value.
The amount that you can finance
Refurbishment bridging loans have the flexibility to offer a wide range of funding to suit your needs. It could be a small amount you need for one property, or you could be a developer who needs substantial funding to help bring multiple properties along and to the market for sale.
Of course, the one thing to remember is that the amount of funding available not only takes into account the project but also your current financial position.
In addition to the rolled-up interest, the flexibility of a refurbishment bridging loan can also be extended towards the length of the term, and the often short time frame required to complete the application means funds come through quicker than with other forms of finance.