If you’ve ever walked away from a tired terrace or a run-down flat because the bank said “no mortgage,” you’re not alone. The good news? Bridging finance for property renovations can turn those neglected homes into profitable projects—fast.
Whether you’re a first-time developer, a DIY investor, or someone simply looking to fund serious home improvements, this guide will walk you through everything you need to know about bridging loans, how they work, the pros and cons, and how to get the best possible rates in the UK.
What Is a Bridging Loan?
A bridging loan is a short-term, interest-only facility used to finance the purchase and/or refurbishment of property—typically for periods between 3 and 18 months. It’s designed to “bridge the gap” between buying a property and selling it or refinancing onto a long-term mortgage.
Unlike traditional mortgages, which can take 6–12 weeks and often reject uninhabitable properties, bridging lenders are far more flexible.
Key features:
- Fast access to funds (as little as 7–15 days)
- Loans based on property value and exit plan, not just income
- Works for unmortgageable properties (e.g. no kitchen or bathroom)
- Short-term by design, ideal for flips or renovations
How Much Can I Borrow?
Here’s how bridging loans for property refurbishment finance typically work in the UK:
✅ Lending Criteria:
- Up to 75% of the Gross Development Value (GDV)
GDV is the estimated market value of the property after renovation works are complete. - Up to 75% of the gross purchase price
That means if you’re buying a property for £200,000, lenders may offer up to £150,000 towards the purchase. - Up to 100% of construction costs
Refurbishment or improvement costs can be fully funded, usually released in staged payments or monitored drawdowns during the build. - Loan Amount Paid Net
The amount released to you is net of fees and interest. That means arrangement fees, legal fees, valuation, and even some (or all) of the interest may be deducted upfront—not added later.
Example:
If you’re approved for a £200,000 bridging loan, you might receive £180,000 net after fees and interest deductions. Always factor this in when calculating your deposit and cashflow.
What Can You Use Bridging Finance For?
- Light refurbishments (new kitchen, redecoration, boiler replacement)
- Heavy refurbishments (structural work, loft conversions, extensions)
- Properties requiring change of use (e.g., office to residential)
- Title issues or probate properties
- Projects that need planning approval or listed building consent
- Funding auction purchases or chain-breaks
The Pros of Using Bridging Finance for Renovations
| Benefit | Why It Matters |
| Access to unmortgageable properties | Lenders accept properties without a working kitchen or bathroom |
| 100% construction cost cover | You won’t need to fund building work out of pocket |
| Roll-up interest options | No monthly payments needed—interest is added to the loan total |
| Quick turnaround | Funds often available within 7–14 days |
| Flexible credit checks | Focus is on the asset and exit strategy, not just your income |
| No early repayment charges | Pay back early without penalty if you finish ahead of schedule |
The Cons to Watch Out For
- Higher Interest Rates
Typical bridging loan rates range from 0.55% to 1.5% per month—much higher than traditional mortgages. - Short-term pressure
Most terms range from 6 to 24 months. Miss your exit deadline, and you may face extension fees or risk repossession. - Costs Deducted Upfront
You may need to provide more funds than expected because you receive a net loan amount (after interest and fees are deducted). - Exit Strategy Must Be Clear
Whether it’s sale or refinance, lenders want certainty about how and when you’ll repay the loan.
How to Get the Best Bridging Loan Rates
1. Have a Solid Exit Strategy
Whether you plan to sell or refinance, have documented comparables, build costs, and timeframes ready.
2. Minimise Your Loan-to-Value (LTV)
Lower LTV = lower rates. If you can keep your total borrowing below 65% GDV, lenders may offer preferential pricing.
3. Use a Specialist Broker
At Sunrise Commercial Finance, we have direct access to 30+ specialist lenders—each with different risk appetites. We match your project to the right lender, at the right rate, every time.
4. Bundle Legal & Valuation Fees
Using lenders that offer dual legal representation or title indemnity insurance can save thousands and speed up the process.
5. Apply at the Right Stage
Lenders move faster when you’re ready to transact. Have your purchase agreed, renovation budget finalised, and ID/proof of funds ready when applying.
Example Case Study – Real Numbers, Real Deal
Client: First-time developer from Birmingham
Purchase Price: £180,000
Refurbishment Budget: £50,000
GDV: £290,000
Facility: £217,500 (75% GDV)
Terms: 12 months at 0.75% per month, rolled-up interest
Exit: Refinanced to a 5-year BTL at 70% LTV
Profit after refinance & rental uplift: £38,000 (plus monthly cashflow)
Bridging Loan Application Checklist
Here’s what most lenders and brokers will need to process your application:
- Memorandum of Sale / Heads of Terms
- Purchase price and GDV evidence (estate agent comparables)
- Detailed schedule of works with costings
- Planning permission (if needed)
- Proof of funds (deposit & contingency)
- ID and proof of address
- Exit plan (sale or refinance evidence)
Final Thoughts
Bridging loans can be a powerful tool for unlocking value from run-down or unmortgageable properties. They’re not the cheapest solution—but with the right strategy and broker, they can be the most profitable.
At Sunrise Commercial Finance, we’ve helped hundreds of new and experienced developers navigate the bridging market. Whether you need fast funds, help structuring the deal, or just want honest advice—you’re in safe hands.
Ready to unlock your next renovation project?
Get in touch at sunrisecommercial.co.uk or call us for a free consultation.
📞 Call us at 07939 091418
📧 Email: john@sunrisecommercial.co.uk
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