Bridging Finance for Property Refurbishment

What was the situation?

The clients owned a substantial property in Brighton with no existing mortgage. They had initially placed the property on the market but decided to temporarily withdraw it to complete internal refurbishment works aimed at maximising its eventual sale value.

Their plans centred around transforming the existing basement from a simple storage area into a functional living space. It had already been excavated, but required significant improvements including damp proofing, installing a bathroom/utility room, and finishing cosmetic work to make it fit for purpose. These renovations would effectively upgrade the property from a 5-bedroom, 3-bathroom house to a more valuable 7-bedroom, 4-bathroom property. The project also required electrical work throughout.

The property, valued at approximately £3 million, had been jointly owned by the clients since 2013. With their four children having left home, the clients were looking to downsize and sought to borrow £300,000 to complete the renovation works, representing a very conservative loan-to-value ratio of just 10%.

What was the issue?

When presenting this case to the lenders, we found that the clients faced several obstacles in securing appropriate financing.

The renovation works were projected to take approximately 3 months, but as this was a regulated loan, it required a maximum term of 12 months. Due to this, many lenders were hesitant due to the relatively short timeframe for completing the works and selling the property.

Additionally, due to regulatory constraints, some lenders were unable to offer the release of funds in stages for the construction project, which complicated the financing structure.

Despite the basement already being excavated, the required damp proofing works meant some lenders classified the project as a “basement dig”, a category that fell outside their standard lending criteria.

Finally, despite the extremely low loan-to-value ratio, some lenders had maximum property value restrictions of £1 million, automatically disqualifying this £3 million property from consideration.

What was the process?

The key to resolving this situation was identifying a flexible lender who could recognise the minimal risk profile of the deal. Given the low LTV and the clients’ strong financial position, the case presented very limited downside, particularly with a viable alternative exit strategy of refinancing onto a standard mortgage if a sale wasn’t completed within the timeframe.

We leveraged our extensive funding relationships to identify lenders with an appetite for this type of transaction. The process involved detailed discussions with potential lenders, highlighting the strength of the client’s position and the substantial equity buffer in the property.

What was the solution?

LDN successfully secured funding through one of our regular lending partners who took the time to thoroughly understand the nuances of the case. After comprehensive discussions with our team, they offered their most competitive bridging terms possible.

The entire process was completed efficiently, with funding secured within just 4 weeks. This allowed the clients to promptly begin their refurbishment project without delay.

The clients were extremely satisfied with both the process and outcome, as the financing enabled them to complete their planned renovations, maximise their property’s value, and progress their downsizing plans on their preferred timeline.

Need help securing bridging finance for multi-unit properties? Our experts are on hand to assist. Call 020 3903 9875 to speak to an adviser, or use our online contact form.