What is it?
There is a range of short-term loans (STLs) available which will enable you to carry out light or heavy refurbishment works on an investment property. The type of loan you need will depend on the amount of proposed works to be carried out.
Each lender has their own definition of light or heavy refurbishment but as a rule of thumb:
Heavy refurbishment constitutes major structural work, costing more than 15% of the property value, which could need planning permission or involve certain building regulations.
Light refurbishment works cost less than 15% of the property value. These can include cosmetic improvements to a property and smaller work such as rewiring, repainting or installing a new bathroom.
Investors can raise finance quickly to do the works, increase the value of the property and then sell on or change to a buy-to-let mortgage term facility.
Who is it for?
Light and heavy refurbishment STLs are intended for experienced landlords.
A recent client success:
Clients purchased a derelict, partly vandalised property in need of a full refurbishment. CPC Finance arranged a short term loan in order to complete the purchase and release additional funds for the refurbishment works to be carried out. The clients completed the refurbishments required and re-mortgaged on to a term facility.
You will need an exit route in place for the finance. Once the refurbishment is completed, the finance can usually be switched to a term loan if you wish to retain the property to rent out, or alternatively the exit route can be to sell the property.
Flexible repayment options are available to allow you to choose the term that payments can be retained for.
Be aware of local council legislation, for example where there is an Article 4 Direction in the area. This will impact on the planning permissions needed for conversion into an HMO.