WANTING TO FINANCE YOUR NEXT RENOVATION PROJECT ?
A lender will want to know whether it ’ s a Light , Medium or Heavy refurb before they quote you terms . Keith Forster of PF & D Ltd explains all
There are a number of quality lenders who specialise solely in providing finance for renovation projects . Over time , they have learnt that these project fall into one of the three categories of Light / Medium / Heavy refurb and so their product matrix is based on a ‘ rule of thumb ’ formula .
In essence it is the build costs vs the purchase price / current value . If the cost of works is below 25 % of the purchase price it is Light , 25-100 % is medium and anything over 100 % with no upper cap is heavy .
There are just a couple of scenarios where the scheme would more than likely fall into heavy and that would be if the square footage is increasing by more than 25 % of the existing floor space or if the build costs are over say £ 1.5m .
There is a very strong appetite for applications from borrowers at the moment with several lenders funding the less experienced developer .
Interest rates vary from lender to lender as does the requirement as to whether the lender will accept a valuer to monitor and sign off the works or insist on a qualified QS instead , which will add to your costs .
The fact is , that the offerings from lenders in this sector are currently very good indeed with many providing a very high percentage of the day one site price as well as funding all the works , though typically these are paid in arrears ( i . e . you need to pay for materials and labour upfront and the lender pays for the works completed in stages as the works progress ).
All in all , there is a very strong appetite for applications from borrowers at the moment with several lenders funding the less experienced developer .
Typically , loans will be secured on the proposed property only and can be to limited companies , partnerships , and individuals throughout the UK .
PF & D LTD T : 0161 433 9981 W : pf-d . com Connecting Developers to Lenders
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