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March 30, 2017

Refurbishment Finance: how does it compare?

 

The world of short-term property finance can be a crowded marketplace. So how does our newest product, Refurbishment Finance, stack up?  

Think of it as sitting between our current bridging and development finance products – in many ways combining the best of both.

You’re no doubt aware of the benefits of bridging: allowing your client a fast line of credit before securing funding through refinance or sale. Now you can offer them the flexibility of a development loan to the proposition, unlocking the benefits of GDV as well as the cash flow advantages of rolled interest.

A Refurbishment loan from LendInvest is at it’s most useful to your client in the way money is released: funding the property purchase as well as refurbishment works as the project progresses. 

 

Auction Bridging Refurbishment Development
Loan size £75k – £7.5m £100k – £7.5m £100k – £8m £250k – £10m
Interest Retained Retained Rolled Rolled
GDV No No Yes Yes
Term Up to 12 months Up to 12 months Up to 18 months Up to 24 months


Use case:

Mark is a professional landlord with a portfolio of 10 properties across Edinburgh. He regularly purchases properties in need of work before renovating and refinancing onto BTL finance.

Mark has the opportunity to purchase a run-down detached property in suburban Edinburgh. With most of his capital tied up in an ongoing project, Mark is looking to maximise his leverage so he can take the opportunity whilst it lasts.

Using Refurbishment Finance, the costs are as follows:

Gross development value: £360,000

Purchase price: £190,000

Day 1 loan: £133,000

Build cost: £40,000

Total loan amount: £213,000

Day 1 LTV: 70%

Loan to GDV: 60%

Interest rate: 0.92%

Profit on costs: 22.17%

For additional use cases, product information and key features, download the Refurbishment Finance guide here.