The scope of the commercial real estate market has changed dramatically in recent years, with more and more businesses opting to rent rather than buy. But as a result, there is now greater demand for refurbishment finance to fund the costs of refurbishment and renovation work on commercial properties.
What is Refurbishment Finance and why might you need it?
A renovation loan is a form of finance that allows you to renovate your property and then rent it out. It’s for investors and builders who want to convert a property before renting it out, often known as a refurbishment bridging loan.
Refurbishment finance is a way to fund the costs of refurbishment and renovation work on commercial properties. It can be used to finance a wide range of improvements, including new flooring, painting, or the installation of new fixtures and fittings.
Refurbishment finance may be a good option for businesses that want to update their premises but don’t have the upfront capital to do so. It can also be a good way to spread the cost of refurbishment over a period of time, making it more affordable.
There are two primary short-term loan options available to professional investors, depending on whether the applicant wishes to undertake light or heavy renovation work.
Heavy refurbishments may generally be financed with light refurbishment money, which can help you install a new kitchen, bathroom, and general decorating that is intended to raise the property value as well as rental income.
Anything that requires planning permission concerning the structure of the property with the aim of increasing the footprint by means of extensions is referred to as heavy.
How does Refurbishment Finance work?
There are a number of different ways to finance commercial refurbishment, including taking out a loan, using savings, or seeking investors.
Refurbishment finance works by providing businesses with the funds they need to pay for refurbishment work. The funds can be used to pay for materials, labour, or other costs associated with the refurbishment project.
The amount of money that can be borrowed will depend on a number of factors, including the value of the property and the amount of work that needs to be carried out.
What are the costs of using Refurbishment Finance for commercial mortgages
The costs of using refurbishment finance for commercial mortgages can vary depending on a number of factors. Some of the key costs to consider include:
- The interest rate: This is the amount you will need to pay for borrowing the money. The interest rate will be determined by a number of factors, including the amount you borrow, the duration of the loan, and the lender you choose.
- The fees: There may be a range of fees associated with taking out a loan, including application fees, valuation fees, and early repayment charges.
- The repayment period: This is the length of time over which you will need to repay the loan. The repayment period will be determined by the lender, and may be anywhere from one to five years.
The benefits of using Refurbishment Finance for commercial mortgages
There are a number of benefits to using refurbishment finance for commercial mortgages. Some of the key benefits include:
- The ability to spread the cost of refurbishment over a period of time: This can make the refurbishment more affordable and help you better manage your finances.
- The ability to renovate your property without having to take out a large loan: This can help you keep your borrowing costs down.
- The ability to raise the value of your property: Refurbishment can add value to your property, making it more attractive to potential buyers or tenants.
There are a number of different ways to finance commercial refurbishment, including taking out a loan, using savings, or seeking investors. Refurbishment finance can be a good option for businesses that want to update their premises but don’t have the upfront capital to do so. It can also be a good way to spread the cost of refurbishment over a period of time, making it more affordable.
A specialist renovation mortgage may help you finance your project by giving you the peace of mind that it will significantly raise the property’s final selling price.
To get started with your refurbishment finance application, get in touch with our specialists today.