Refurbishment
Bridging Loans

A refurbishment bridging loan is a short-term property finance product that funds the purchase and renovation of a property — either residential or commercial. It bridges the gap between buying an asset in its current condition and either selling it at a higher post-works value or refinancing onto a long-term mortgage once the property is in lettable or marketable condition. Standard mortgage lenders will not lend on properties requiring significant works — refurbishment bridging fills that gap.

Light refurbishment covers cosmetic and non-structural improvements — new kitchen, bathroom, decoration, flooring, windows and doors. The loan is advanced on a day-one basis against the current open market value, from 0.85%/month, for 3–9 months. Heavy refurbishment involves structural changes — extensions, loft conversions, internal reconfiguration, change of use, or making an uninhabitable property habitable. Heavy refurb loans are structured with staged drawdowns against the Gross Development Value (GDV), from 0.89%/month, for 9–18 months.

BRRR stands for Buy, Refurbish, Refinance, Rent. An investor buys a below-market-value or distressed property using bridging finance, carries out refurbishment to lift the value, then refinances onto a buy-to-let mortgage at the improved value — pulling out as much equity as possible to redeploy into the next deal. The bridging loan funds the purchase and works; the refinance repays it. The strategy compounds over time to build a portfolio of rental assets with recycled capital.

The lender makes an initial advance at the point of purchase — typically enough to cover the purchase price — based on the current value. As works progress, a monitoring surveyor inspects and verifies each completed stage. Once signed off, the next tranche is released. You pay interest only on capital drawn — not the full facility — which reduces the overall cost of finance during the works period. The total facility is agreed at the outset; you are not going back to the lender for approval at each stage.

GDV (Gross Development Value) is the estimated open market value of the property once all refurbishment works are complete. On heavy refurbishment projects, AF Credit lends up to 75% of GDV rather than 75% of the current value — which can allow access to significantly more capital. A RICS-qualified valuer confirms the GDV based on comparable evidence and the agreed scope of works. The credibility of your GDV depends directly on the quality of the comparables in the area and the realism of the works schedule.

Yes — this is one of the most common uses. Standard mortgage lenders will not lend on a property without a working kitchen and bathroom. AF Credit can fund the purchase of an uninhabitable or derelict property and, where appropriate, provide staged drawdowns to fund the works required to bring it to a habitable standard. Once works are complete and the property meets standard lender criteria, you refinance onto a buy-to-let, residential, or commercial mortgage product.

Loan to Cost (LTC) is the total loan facility expressed as a percentage of the total project cost — purchase price plus refurbishment budget plus acquisition costs. It is used alongside LTV and LTGDV to give lenders a full picture of borrower equity in the deal. A lower LTC means the borrower has contributed more of their own capital, which reduces lender risk. On refurbishment projects, lenders typically want to see LTC below 80–85%, though this varies by lender and project type.

A monitoring surveyor — typically a RICS-qualified building surveyor — is appointed to independently oversee the works programme on a heavy refurbishment loan. They inspect at agreed milestones, verify that completed works meet the required standard and agreed scope, and sign off each stage before the next drawdown is released. Their role protects both lender and borrower by ensuring the project is progressing as planned. Monitoring surveyor fees are paid by the borrower at each inspection — typically £400–£800 per visit.

Total costs include: monthly interest (0.85–0.89%/month on drawn balance), arrangement fee (typically 1–2% of facility, retained from loan), valuation fee (£500–£1,500+), lender's legal fees (£1,500–£3,000), your own legal fees (£1,500–£3,000), and monitoring surveyor fees on heavy refurb (£400–£800 per inspection). There is no exit fee, and no ERC subject to the 3-month minimum.

AF Credit considers adverse credit on a case-by-case basis. As a direct principal lender, we make our own credit decisions and can look at the full picture — the asset, the project quality, the exit strategy — rather than relying solely on credit score. CCJs, defaults, missed payments, and other adverse history can be considered depending on the circumstances. Speak to us directly before assuming you will be declined.

Yes. AF Credit lends to both individuals and limited companies, including Special Purpose Vehicles (SPVs). Whether you are a first-time investor carrying out your first refurbishment, a portfolio landlord operating through a company, or an experienced developer with multiple sites, we can consider your application. The appropriate structure — individual or corporate — will depend on your circumstances and tax position.

AF Credit provides same-day indicative terms on qualifying enquiries. Once you decide to proceed, we can instruct solicitors within 12 hours of a credit decision. On straightforward light refurbishment cases, completion can be achievable in 5–10 working days. Heavy refurbishment cases, particularly those with staged drawdown structures, typically take 10–20 working days to set up. The legal stage is usually the longest component — instructing your own solicitor early makes a material difference to the timeline.

No. AF Credit does not charge an early repayment charge on refurbishment bridging loans, subject to a minimum 3-month interest period. If you complete the refurbishment faster than planned and sell or refinance ahead of the agreed term, you can repay without penalty beyond the minimum period. This is particularly valuable on flips where the sale completes faster than expected.

Refurbishment bridging is for projects involving an existing structure — improvement, conversion, or restoration. Development finance is for ground-up construction where there is no existing habitable structure at the start. Refurbishment bridging is simpler, faster to set up, and typically cheaper than development finance. AF Credit offers refurbishment and bridging finance — not ground-up development. If you are converting a derelict but structurally sound building, refurbishment bridging is almost certainly the right product.

Yes. Converting a standard residential house into a licensed HMO is a common use case. AF Credit can fund the purchase and the reconfiguration works — en-suites, fire safety, room additions — with exit onto a specialist HMO buy-to-let mortgage once the property is tenanted and generating income. The HMO licence and the income from tenants are key to the refinance exit, so it is important to understand the local HMO licensing requirements before committing to the project.

For works that require planning consent — extensions beyond permitted development limits, change of use, basement conversions — AF Credit will want planning permission to be in place and implementable before the loan completes. For works within permitted development rights, planning is not required. Works that are subject to a pending planning application introduce uncertainty that lenders cannot underwrite. Secure planning before applying for finance, not after.

Yes. AF Credit considers both residential and commercial assets for refurbishment bridging, including commercial-to-residential conversions. Commercial property typically requires a full RICS valuation and, for change of use projects, planning consent or evidence of permitted development compliance. Speak to our team about the specifics of your commercial refurbishment project.

The two primary exit strategies are: (1) Sale — selling the refurbished property at its improved value and repaying the bridge from the proceeds. The lender will want comparable evidence that the anticipated sale price is achievable. (2) Refinance — refinancing onto a buy-to-let, residential, or commercial mortgage at the improved value. The lender will want to see that the borrower can qualify for the refinance based on rental income, personal income, credit profile, and the condition of the property once works are complete. A clear, credible, evidenced exit is one of the most important aspects of any bridging loan application.

AF Credit currently lends on property in England and Wales only. We do not currently offer refurbishment bridging loans on Scottish property due to the differences in Scottish property law.

Default interest applies if a refurbishment bridging loan expires without being redeemed — because the property has not sold, the refinance has not completed, or the works have overrun beyond the loan term. Default interest rates are typically higher than the standard rate — often 1.5–3% per month on the outstanding balance. The best way to avoid default interest is to plan realistic timelines and communicate with your lender early if the project is running behind. Most lenders, including AF Credit, would rather discuss an extension well in advance than see a loan tip into default.