What is the difference between ground-up and refurbishment finance?

Ground-up development finance funds construction from cleared or bare land, so the lender is exposed to full build and planning risk and prices accordingly. Refurbishment finance funds works to a building that already stands, from a cosmetic refresh to a structural conversion. Because there is existing value and standing bricks, refurbishment is generally judged closer to a bridging loan than to full development, which usually makes it cheaper and less equity-hungry.

What counts as light versus heavy refurbishment?

Light refurbishment is cosmetic work with no structural change and usually no planning permission, such as new kitchens, bathrooms, decoration and re-wiring; it is typically funded on bridging-style pricing. Heavy refurbishment involves structural work, extensions, or a change of use, and sits much closer to ground-up development in both risk and cost. The distinction matters because a lender offering cheap light-refurb terms will not fund a structural conversion on the same basis.

How much deposit or equity do you need for each?

Ground-up development finance typically advances to 70 to 75% of total cost, capped at 55 to 65% of gross development value, so you usually need to fund 20 to 35% of cost yourself. Refurbishment finance is often sized on value: around 65 to 75% of current value and 75 to 80% of cost, with the finished loan capped near 65 to 70% of end value. Your actual equity depends on how cost and end value compare on the specific scheme.

Which is cheaper, ground-up or refurbishment finance?

Refurbishment is usually cheaper, because there is less risk than an empty-site build. Ground-up runs around 0.85 to 1.5% a month; light refurbishment sits near 0.6 to 1% on bridging pricing, and heavy refurbishment around 0.75 to 1.3%. On top of the rate, both carry an arrangement fee of 1 to 2%, an exit fee near 0.5 to 1%, and valuation, monitoring and legal costs. An overrun tips either product into default interest of 2 to 4% a month, so model the exit date carefully.

Ground-Up vs Refurbishment Finance: Which Development Route Fits

The Core Difference

You’re choosing between building something new and improving something that already stands. Ground-up finance funds construction from cleared or bare land. Refurbishment finance funds works to an existing building, from a light refresh to a heavy structural conversion.

What separates them is the risk you’re asking a lender to take. Ground-up carries the full weight of construction and planning risk, so it costs more and wants more of your equity; refurbishment on standing bricks is judged closer to bridging, which is why it prices lower and leaves more in your cash flow.

Getting the category wrong costs you more than a rate. Ground-up funders and light-refurbishment bridgers are rarely the same firm, so a scheme filed under the wrong heading doesn’t simply get priced badly, it goes to people who will decline it.

Light vs Heavy Refurbishment

You’ll find refurbishment splits in two. Light refurbishment covers cosmetic works with no structural change and usually no planning, priced like a bridging loan. Heavy refurbishment covers structural work, extensions or a change of use, and sits much closer to ground-up development.

Your paperwork and your pricing both climb with the works, so settle the split early. A lender offering cheap light-refurbishment bridging won’t touch a structural conversion on the same terms, and finding that out halfway through stalls the site and your cash flow together.

The practical difference on site is who has to sign before your money arrives. On a light job it’s yours from the start. On a heavy one it comes in tranches, each of them waiting on your monitoring surveyor confirming that the steel and the drainage have actually gone in, which is a fortnight of programme nobody puts in the appraisal.

How Lenders Size Each Loan

You’ll see the two products measured differently. Ground-up lenders work to loan-to-cost, usually 70 to 75%, capped at 55 to 65% of gross development value, with 20 to 35% equity from you. Refurbishment leans on the existing value.

At 65 to 75% of current value, refurbishment is sized off the building instead. Heavy schemes reach 75 to 80% of cost, and the whole facility is then capped near 65 to 70% of end value.

Whichever product you’re on, it’s the lower of the two sums that sets your loan, so run both before you commit. Seventy per cent of cost and 70% of end value rarely give the same answer, and the gap between them is what your own cash flow has to cover.

What Each One Costs

You pay for build risk in the rate. Ground-up runs around 0.85 to 1.5% a month. Light refurbishment sits near 0.6 to 1% a month on bridging pricing, and heavy refurbishment lands around 0.75 to 1.3% a month.

At arrangement fees of 1 to 2% and an exit fee near 0.5 to 1%, plus valuation, monitoring and legal work on both sides, the fees are what you should be comparing rather than the monthly rate. On a short refurbishment they can outweigh the whole rate difference between the two products, and they all come out of your cash flow before a single unit sells.

Overrun the term and either product tips into default interest of 2 to 4% a month. That’s the real cost of running late. It dwarfs the gap between the two rates, so the date you have to be out by matters more than the rate you go in on.

Which One Fits Your Project

You match the finance to what you’re actually doing. New build on cleared land is ground-up. Cosmetic work on a sound building is light refurbishment. Structural change, extensions or a change of use is heavy refurbishment.

Your planning status usually makes the call. Full planning and new construction point to ground-up; works inside the existing footprint keep you in cheaper refurbishment territory, and that’s worth testing before you buy, because a scheme redrawn to stay inside the footprint can move to the cheaper product without losing much of the value.

You don’t get to decide it on your own, either. The lender’s valuer and monitoring surveyor classify the works for themselves, and when the valuer calls a job heavy that you priced as light, the terms move underneath you before your first drawdown. Ask the question when you file the appraisal, not when you draw the money.

Ground-Up vs Refurbishment FAQs

What is the difference between ground-up and refurbishment finance?
Ground-up development finance funds construction from cleared or bare land, so the lender is exposed to full build and planning risk and prices accordingly. Refurbishment finance funds works to a building that already stands, from a cosmetic refresh to a structural conversion. Because there is existing value and standing bricks, refurbishment is generally judged closer to a bridging loan than to full development, which usually makes it cheaper and less equity-hungry.
What counts as light versus heavy refurbishment?
Light refurbishment is cosmetic work with no structural change and usually no planning permission, such as new kitchens, bathrooms, decoration and re-wiring; it is typically funded on bridging-style pricing. Heavy refurbishment involves structural work, extensions, or a change of use, and sits much closer to ground-up development in both risk and cost. The distinction matters because a lender offering cheap light-refurb terms will not fund a structural conversion on the same basis.
How much deposit or equity do you need for each?
Ground-up development finance typically advances to 70 to 75% of total cost, capped at 55 to 65% of gross development value, so you usually need to fund 20 to 35% of cost yourself. Refurbishment finance is often sized on value: around 65 to 75% of current value and 75 to 80% of cost, with the finished loan capped near 65 to 70% of end value. Your actual equity depends on how cost and end value compare on the specific scheme.
Which is cheaper, ground-up or refurbishment finance?
Refurbishment is usually cheaper, because there is less risk than an empty-site build. Ground-up runs around 0.85 to 1.5% a month; light refurbishment sits near 0.6 to 1% on bridging pricing, and heavy refurbishment around 0.75 to 1.3%. On top of the rate, both carry an arrangement fee of 1 to 2%, an exit fee near 0.5 to 1%, and valuation, monitoring and legal costs. An overrun tips either product into default interest of 2 to 4% a month, so model the exit date carefully.

How we compared ground-up and refurbishment finance

What we covered. We compare the two main development routes in 2026: ground-up construction finance and refurbishment finance, including the light versus heavy split. We set out build risk, loan sizing, pricing and how planning decides the route. We do not rely on comparison-site summaries.

Data sources. Lending limits, rate and equity ranges were checked against primary sources in July 2026, including specialist lender product pages and the lenders we assess in our development finance reviews and roundup.

How we handle gaps. Where a figure varies by lender, we give the market range rather than a single false-precision number, and we flag that your terms depend on the scheme, the works and your track record.

Update cadence. We re-verify this page regularly, and whenever market pricing moves. The verification date reflects the most recent full review. Some links on this page are affiliate links, see our editorial policy.

Regulatory note. This page is editorial content, not regulated financial advice. Development and refurbishment finance to a limited company or investor is generally unregulated lending, so compare facilities and read the terms before you sign.