Refurbishment Finance - Business Expert
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Refurbishment Finance

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Mike Smith
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Mike Smith
Updated on 3 June 2026
Independently assessed Rates verified 3 June 2026
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Refurbishment finance funds the renovation, conversion, or improvement of an existing building — rather than constructing a new one. It sits between standard bridging loans (which can cover light cosmetic work) and full ground-up development finance (which funds new builds). The distinction between “light” and “heavy” refurbishment is important because it determines which products and lenders apply.

Light vs Heavy Refurbishment

Light refurbishment covers cosmetic or non-structural works: redecoration, kitchen and bathroom upgrades, new flooring, garden works, minor repairs. No planning permission required. No structural alterations.

Lenders typically treat light refurbishment as bridging finance — the borrower takes a bridging loan against the property, completes the works, and sells or refinances at the higher end value. The build cost is usually funded from the borrower’s own equity rather than drawn down via a monitored facility.

Heavy refurbishment covers structural works, change of use, conversion (e.g. offices to residential, a house to flats), extensions, or any work requiring planning permission. More complex, longer timelines, and requires a monitored drawdown facility comparable to development finance.

How Refurbishment Finance Works

For heavy refurbishment and conversion projects, the structure mirrors ground-up development finance:

  1. Initial advance: covers purchase price (or redeems existing mortgage) and mobilisation costs
  2. Build drawdowns: released in stages as works are certified by a monitoring surveyor
  3. Exit: repayment via sale of completed units or refinance onto a long-term mortgage

The key difference from ground-up is that there is an existing building with existing value — which gives the lender more security from day one compared to a cleared site.

Loan Metrics for Refurbishment Finance

LTV on day one (purchase/current value): typically 65–75% [VERIFY current market norms]

LTC (loan to total cost): for heavy refurbishment, lenders often advance against total cost (purchase price + build costs), typically up to 75–80% LTC [VERIFY]

LTGDV or LTAV (loan to after development value / after refurbishment value): the key exit metric — most lenders cap exposure at 65–70% of the projected end value [VERIFY]

Planning and Conversion Projects

Converting a commercial building to residential — particularly under permitted development rights or after full planning — is a common refurbishment finance use case. The key variables:

  • Whether permitted development applies (faster, no full planning application)
  • Planning conditions and timing risk
  • End use — residential for sale vs buy-to-let retained

Some lenders specifically target conversion projects. Others are more conservative on schemes where planning is not yet secured. [EDITORIAL JUDGEMENT]

Costs

Refurbishment finance is typically cheaper than ground-up development finance because the existing building provides more immediate security. Light refurbishment bridging rates can be similar to standard commercial bridging (0.6–1% per month). Heavy refurbishment rates typically sit between bridging and ground-up development rates (0.75–1.3% per month). [VERIFY current market rate ranges]

Arrangement fees (1–1.5%), monitoring surveyor costs, and legal fees apply as with development finance. See: Development Finance Costs Explained.

Lenders

Most development finance lenders cover heavy refurbishment. Bridging lenders cover light refurbishment within standard bridging products. The overlap is significant — many lenders offering both:

  • Shawbrook, Aldermore, Together, Close Brothers (heavier refurbishment and conversion)
  • Roma Finance, Octopus Real Estate, Interbay (light through to heavy)
  • Specialist bridging lenders for light refurbishment only

[VERIFY current lender appetite for specific refurbishment types — HUMAN CONFIRMATION NEEDED]

Who Refurbishment Finance Suits

Refurbishment finance is used by:
– Property investors upgrading BTL stock before refinancing onto long-term mortgages
– Developers converting commercial property to residential
– Investors buying distressed or unmortgageable properties, refurbishing, and selling
– Landlords adding extensions or converting single dwellings to HMOs

  • Ground-Up Development Finance
  • Ground-Up vs Refurbishment Finance
  • Development Finance Costs Explained
  • Best Development Finance Lenders UK
  • Bridging Loans