Many of the best buy-to-let opportunities in England are not accessible to most buyers, especially those buying from abroad.
A flat with no working kitchen or a house left empty for two years might be cheap, but these properties come with big challenges. Traditional lenders usually will not finance them.
This is where refurbishment finance comes in.
This guide explains how refurbishment finance works, what it costs, and how the buy, improve, and refinance process fits together.
We also explain what is different if you are managing the project from outside the UK.
What is refurbishment finance?
Refurbishment finance is a short-term bridging loan that covers both buying a property and paying for the improvements, before you switch to a long-term mortgage or sell.
It is also known as refurbishment bridging finance or simply a bridging loan for renovation. These are just different names for the same flexible product.
These loans usually last between 6-18 months. Lenders focus on the property's potential and your plans, not just your UK payslips or credit history. This means they are available even if you are new to the UK or investing from overseas.
Why will a buy-to-let mortgage not work?
Buy-to-let mortgages are meant for properties that can be rented out right away.
If a surveyor's report finds a missing kitchen or serious damp, your mortgage application will be delayed, no matter how big your deposit is. Many investors only discover this after making an offer, which is a common reason for mortgage rejections.
Refurbishment finance fills this gap. It is useful for:
- Properties without a working kitchen or bathroom, or with serious damp
- Auction purchases, where you exchange on the day and have 28 days to complete
- Older properties that need a new kitchen, bathroom, or rewiring before they can be rented out easily
- Converting a property into an HMO or splitting a house into separate flats
- Doing energy efficiency work required before you can legally rent out the property
The last point is becoming more important. Since April 2020, you cannot rent out a property in England with an EPC rating below E. The government has said that all private rentals must reach EPC C by 1 October 2030.
This means landlords may need to spend up to £10,000 per property, or 10% of its value if that is less. Properties with poor EPC ratings are cheaper now because of this upcoming cost.
If you cannot get a mortgage, refurbishment finance can help you move forward. Costs are similar across lenders, so it is important to understand how the process works.
Can you get refurbishment finance if you live outside the UK?
Yes, non-UK residents can get refurbishment finance, though there are fewer lenders to choose from. High street banks usually turn down overseas applicants because they do not have a UK credit history or income, but specialist lenders focus on the property and your exit plan.
If you are applying from abroad, you will usually need to provide:
- Certified ID and proof of your address abroad
- Detailed evidence of your deposit's source
- A UK solicitor (instructed before offer)
- Often a UK bank account
- Clarity on whether you are buying personally or via a UK company
Keep in mind that proving the source of your funds is often the slowest part of the process for overseas applicants. To avoid delays, gather your documentation as early as possible.
Light or heavy refurbishment: which applies to you?
What you pay depends first on the kind of work you are taking on.
Refurbishment projects fall into 2 main categories: light refurbishment and heavy refurbishment.
- Light refurbishment: Cosmetic updates like replacing kitchens, bathrooms, or rewiring.
- Heavy refurbishment: Structural changes or any work that needs planning permission or building regulations approval.
Your project type determines your rates, maximum loan, and required paperwork.
For example, moving a load-bearing wall counts as heavy refurbishment, even if it is not expensive. But replacing two kitchens and redecorating, even if it costs more, may still be considered light refurbishment.
Lenders care more about the type of work than the amount you spend.
Your rate also depends on your experience and your plan. Borrowers with a good track record and a clear exit strategy get better terms. First-time buyers with less certainty may pay more or be turned down.
This is why it is important to be clear about the scope of your project.
How does refurbishment finance work?
There are 6 main steps in the process, and most of the work happens before you receive any funds:
- Agree the deal and plan: Set the purchase price, refurbishment budget, timeline, and exit strategy.
- Property valuation: A surveyor assesses the property's current and post-refurbishment value (GDV) to determine your borrowing limits.
- Offer and legal process: The lender makes an offer and solicitors handle the legal work. For this, you need a UK solicitor.
- Completion and works: Funds are released either all at once for light refurbishments or in stages for heavy projects as work is approved.
- Revaluation: The property is revalued after works to confirm the final value for refinancing.
- Repayment: Repay the bridging loan by refinancing or selling the property.
A simple light refurbishment usually takes 4-6 months, but it is safer to plan for 6-9 months, especially if you are new or investing from overseas.
Remember, the loan can complete in days, so the bridging timeline is rarely the slow part. Delays usually come from the building work.
What is a Schedule of Works?
A key part of your application is the Schedule of Works. This is a detailed, priced, and timed list of every job in the refurbishment project.
This document shows the lender exactly:
- What will be done
- By whom
- At what cost
- On what timeline
For example, "Refit kitchen, £8,000, fitted by Kent Interiors, weeks 3 to 5" is clear and actionable. Vague entries such as "Kitchen and bathroom, around £15,000" are not enough.
The Schedule of Works reassures your lender and also helps decide your loan size. Always include a 10-15% buffer in your refurbishment budget to cover possible overruns.
How much can you borrow for refurbishment finance?
There are 3 limits that apply to your refurbishment loan, and the lowest one always wins:
- Loan-to-value (LTV): Typically up to 75% of the property's current value.
- Loan-to-cost: Many lenders will fund 100% of refurbishment costs, provided the total loan stays within the gross development value (GDV) cap.
- Loan-to-GDV: Usually 70-75% of the finished (post-refurbishment) value.
For example, with a £180,000 flat, 75% LTV gives you £135,000. Add £25,000 for works, and you get £160,000, which must stay below 70-75% of the projected £250,000 GDV.
What does refurbishment finance cost?
Let us break down the numbers. For £160,000 borrowed over six months at 0.75% per month, with interest rolled up:
Here is something most guides leave out: Lenders deduct rolled-up interest and the arrangement fee from the facility at the start, so £160,000 is a gross figure.
What actually reaches your solicitor:
- Gross facility: £160,000
- Less arrangement fee: £3,200
- Less retained interest: £7,200
- Net funds released: £149,600
You will need to cover the gap (£10,400 in this example) plus your deposit, Stamp Duty (including the 5% extra property surcharge), and professional fees. Altogether, plan for about £60,000 in cash before Stamp Duty, not just your deposit.
Rolled-up interest helps your cash flow during the works because payments are deferred, but keep in mind that the debt grows every month the project overruns.
Buy, refurbish, refinance: how do you repay the loan?
Always plan your exit strategy before you commit to refurbishment finance.
Most investors aim to refinance onto a buy-to-let mortgage once the refurbishment is complete and the property is let. This is the classic "buy, refurbish, refinance" (BRR) cycle.
Your new mortgage is based on the higher, post-refurbishment value. In our example, a 75 percent mortgage on £250,000 means you can borrow £187,500, enough to pay off the bridge loan and get back £27,500.
After all costs, you leave about £32,000 in the deal and own a property worth £250,000. It is a solid outcome, though it is rarely the "pull all your money out" scenario some promise.
Alternatively, you could sell the property (the "flip" strategy), but this exposes you to market risk.
Note: Many buy-to-let lenders will not lend against a new, higher value until you have owned the property for 6 months. Specialist lenders may allow a day-one remortgage if you can prove the works and their value uplift, so check before you start, as assumptions can be expensive.
How do you run a refurbishment in the UK from abroad?
That is the plan on paper. Delivering it from another country is the harder part.
Success depends on having reliable, local support. Hiring a project manager or main contractor to take overall responsibility is almost always worth the cost. Trying to coordinate multiple trades remotely rarely works out.
To keep your project on track, make sure your contract includes clear reporting and accountability. Ask for weekly photo updates and progress notes linked to your Schedule of Works. Hold back about 5% of the contract value until all snagging issues are fixed.
Watch out for time zone differences. Communication delays can easily set the project back by a day or more.
Finally, arrange your letting agent before the refurbishment is finished, so you are ready to secure tenants and refinance as soon as the work is done.
When does this strategy fail?
Even a well-run refurbishment project can come unstuck. There are 4 main pitfalls, often compounding each other:
- Works overrun: Delays mean more interest and possible extension fees.
- Cost overruns: You must fund shortfalls, and lenders may not increase the facility.
- Disappointing valuation: If the post-works value is lower than expected, your refinancing could fall short.
- Letting delays: If you cannot secure a tenant, you may not qualify for a buy-to-let mortgage, extending your exposure.
Projects that handle all 4 setbacks have a solid contingency plan from the start.
Ready to fund your refurbishment?
Refurbishment finance is a short-term tool for buying and improving properties others cannot. Success depends on a solid plan, a contingency fund, and a clear exit. Most failures stem from delays, as interest accrues regardless of progress.
GoGoProp provides short-term bridging loans for this specific purpose.
We fund the purchase when a mortgage is delayed, declined, or too slow for the deadline. We approve in 24 hours and can fund in as little as 10 days, all online.
Underwriting is asset-based, so a non-resident with no UK income and no UK credit file can still qualify. Pricing is a fixed 1% per month, plus a 2% handling fee. Terms run 3 to 12 months, and loans go up to 75% LTV.
Key takeaways
- Refurbishment finance, also called refurbishment bridging finance, funds a purchase plus the works before you refinance or sell.
- Buy-to-let lenders reject properties without a working kitchen or bathroom, which is why the product exists.
- Light refurbishment starts around 0.50% per month, and heavy starts around 0.60%. Your loan-to-value, experience, and exit move the rate more than the category does.
- There are 3 limits that apply at once: loan-to-value, loan-to-cost, and loan-to-GDV. The lowest wins.
- Lenders deduct interest and fees up front, so budget roughly 8% to 10% of the loan as cash beyond your deposit, before Stamp Duty.
- Time is the main risk. Interest accrues while builders delay, and a slipped project can turn a good deal into a break-even one.
Frequently asked questions
What type of properties can be refurbished?
Almost any residential property, including stock that is currently unmortgageable. Listed buildings and non-standard construction are harder, and the pool of willing lenders is smaller.
Can I borrow the refurbishment costs?
Usually yes. Many lenders fund 100% of the works on top of the purchase loan, provided the total stays within their loan-to-GDV limit.
How do lenders monitor refurbishment projects?
On light refurbishment, most accept photographs and invoices. On heavy refurbishment, a monitoring surveyor inspects before each drawdown, and you pay for those visits.
Do I need previous refurbishment experience?
It helps, but is not always required. First-time applicants can offset inexperience with an experienced main contractor, a detailed Schedule of Works, and a lower loan-to-value.
Will limited UK credit history stop my application?
Not necessarily. Lending is secured on the asset, so the property and the exit matter more than your credit file. Recent bankruptcy or active county court judgments will still count against you.
