Light refurbishment bridging products are underwritten against the post-works value
Light refurbishment bridging products are underwritten against the post-works value rather than the purchase price—bridging the gap between acquisition and buy-to-let refinance.
Light refurbishment bridging products are underwritten against the post-works value rather than the purchase price—bridging the gap between acquisition and buy-to-let refinance.
Traditional buy-to-let lenders will generally only lend against the current, 'as-is' value of a property. If an investor buys a dilapidated house for £100,000 and spends £20,000 on renovations, the traditional lender ignores the newly created equity until the six-month seasoning period passes. This traps the investor's capital.
Specialist light refurbishment bridging products work backward. The lender assesses the Gross Development Value (GDV)—say, £160,000 after works. They can then offer a facility that funds both the initial acquisition and 100% of the refurbishment costs, provided the total loan doesn't exceed 70-75% of the GDV. Once works are complete, the developer can instantly refinance onto a standard BTL product at the £160,000 valuation, extracting their initial capital to recycle into the next deal.