How Commercial Finance Fits Into Buy, Refurb, Refinance?

The buy, refurb, refinance business model is a popular way to scale quickly in property. The business model is used by new investors and well established investors. It’s a great way to recycle capital to enable continued growth.

Bridging Loan: Bridging finance is used to purchase the property on the front end, it’s a great way to take on short term lending so that you can refinance within the first 12 months of purchase rather than waiting the 24 months on a mortgage. You can loan up to 85% of the purchase price and rates typically start at 0.44% per month. Bridging loans can range from 3 months to 24.

Heavy and Light Refurbishment Loans: Heavy and light refurbishments loans are used to purchase and refurb properties. Dependant on the level of renovation required will determine whether it falls under a heavy or light refurb loan. Typically lenders will lend based on loan to gross development value (GDV) or loan to cost (LTC). Heavy refurbishments are considered as anything structural or major such as a change of use C3 (Residential property) to C4 (HMO). Light refurbishments would fall under cosmetic changes such as new bathroom, kitchen carpet, etc.

Hire Purchase Fixtures and Fittings: You can also, hire purchase items such as windows, doors, kitchen, bathrooms suites. In brief anything that can be unscrewed and taken away you can get on hire purchase. Loans start at £3,000 and go up to £150,000 and can be stretched over 12-60 month terms. You can refinance the materials on a sale and hire purchase back or the supplier can be paid directly so there’s no requirement to exchange your own funds.