Refurbishment and Conversion Bridging Loans

Property conversion or refurbishment bridging loans are short-term finance options used to either fully convert, or simply refurbish, a property. They were originally designed for landlords, property investors and developers before renting or selling an asset, to enhance property value.

These forms of bridging loans allow you to purchase a property, extend and renovate both the interior and exterior, to produce the best version of your property.

Whether it’s for your main area of residence or an asset in your property portfolio, a refurbishment or conversion bridging loan can be a great way to create more space whilst increasing the property value, and it’s an avenue that has the potential to open many doors.

How can I use these loans to improve my property?

Here are examples of what works are available under our refurbishment and conversion loans:

Refurbishment Loans – What we do:

Refurbishment projects / upgrades
Renovations
Light developments
Planning permission required
Planning permission applied
Short leases > 40 years
Extensions
For applicants wishing to purchase or refinance semi-commercial / commercial property

Conversion Loans – What we do:

- - - Multiple to single
    - Single to multiple
    - Change of use
    - Extensions
    - Loft
    - Ground floor extensions
    - Barn conversions
    - Basements
    - Mixed-use
    - Light refurbishments

Example of Refurbishment/Conversions

Converting

A conversion is a project that changes the use or function of a particular building or room. Popular spaces to convert within the home include:

Bedrooms
Basement
Loft
Garage

Refurbishing

Refurbishment can enrich the overall value and quality of the property. It usually relates to actions such as installing new bathrooms, kitchens, or general redecorating. Refurbishing properties – particularly those bought at auction for a reduced market price – is a great way to increase property yield by meeting the ever-changing needs of the market.

Renovating

Renovation is the process of improving or modernising an old or damaged building. These types of projects are becoming popular due to COVID-19.

Redecorating properties is a regular task performed by landlords, particularly those with HMOs. This style of property usually requires constant maintenance, as they suffer high volumes of wear and tear from a constant stream of tenants. It falls to the landlord to uphold and maintain the correct conditions for these properties.

Why should I refurbish?

Refurbishment projects are popular in the UK for many reasons:

They hold the potential to add tens of thousands of pounds to the overall value.
Property investment can deliver significant capital growth – particularly newly refurbished properties.
They also provide a higher source of rental income for buy-to-let and HMO properties.

Once I have added value to my property, is it possible to draw this money out?

Once again, additional lending will depend on the bridging lender providing the loan.

If accepted, you will have to ensure that the works are completed which will need to be confirmed by the surveyor, this also ensures they are to correct standard.

Most buy-to-let mortgage lenders will happily allow you to take out some of, if not all, the profit made, if you choose to exit your Bridging Loan through refinancing.

However, it could be cheaper for you to wait, complete, then take the funds directly out of the property.

Here at MFS, our tailored loans are made to suit your specific needs, so let us help you find the best option for your financial situation.

What regulations do I have to adhere to?

This will depend on the lender that you are using, as each will have their own set of rules that apply to their loan. It can therefore range from light refurbishment to structural changes, so make sure your loan is tailored to the work you need.

If you are worried about additional fees on top of your initial funding, such as professional or project management fees, we can help.

“We provide bespoke bridging loans, as each case is as unique as you.”

Do building regulations apply?

If you are only looking to complete small changes on your property, then you will most likely need a Light Refurbishment Bridging Loan, which means they do not apply to building regulations.

Light refurbishment consists of work that ultimately does not change the nature of the premises in any structural way, usually relating to the design of the interior.

These tasks generally relate to works such as:

Maintenance works -such as replacements or repairs (excluding heating systems, fuse boxes oil tanks, glazing units)
Electrical works – such as new power / lighting points and changing current circuits (excluding areas close to the baths / showers)
Bathroom unit refurbishment – such as replacing basins, sinks, showers, and baths

If you are looking to refurbish your property for commercial use, then a light refurbishment loan would not be suitable.

If you’re looking for more detail on whether building regulations apply to your project, then click here to be directed to the government’s website.

Is it right for you?

When converting a property, there are a couple of key factors that you should consider:

1) Plan

This should include a clear understanding of what changes are possible, how best to utilise the time needed for each individual section of work, and what works can be completed simultaneously. An initial budget is always advised, to help plan for any contingencies.

2) Time

Works can take anywhere from a couple of weeks, to months, to years! It all depends on whether it’s refurbishment, conversion or renovation works and the size of the project. If you’re looking to complete within a specific timeline, then arranging a time schedule with your builder to keep things on track is a must.

3) Money

Whilst budgets create a solid outline, construction works are notorious for running over schedule for a variety of reasons, including our temperamental British weather, usually resulting in additional labour costs. Arranging refurbishment finance can be a great option for property investments in need of additional capital to finish refurbishment works.

Funds can be released in as little as three days.