When refinancing a completed development onto a buy-to-let mortgage, lenders use the open market value
When refinancing a completed development onto a buy-to-let mortgage, lenders use the open market value—not the original purchase price—allowing developers to extract significant equity if values have risen.
When refinancing a completed development onto a buy-to-let mortgage, lenders use the open market value—not the original purchase price—allowing developers to extract significant equity if values have risen.
The fundamental engine of the BRRR (Buy, Refurbish, Refinance, Rent) strategy is the capitalization of forced appreciation. When an investor buys a dilapidated property for £100k, spends £30k on works, and elevates its value to £180k, they need a lender to recognize that new £180k value to extract their initial £130k cash investment.
While some high street lenders strictly enforce the 'Six-Month Rule' and only lend against the original £100k purchase price, specialist commercial and BTL lenders offer 'Day One Refinance' products. These products instruct the surveyor to assess the property's current Open Market Value (OMV). The lender then advances up to 75% of the £180k (£135k), allowing the developer to pull out 100% of their initial capital to immediately recycle into their next project.