Bridging/Short Term Finance

Bridging Finance for refurbishment of property

Pros and Cons of Bridging Finance when you Refurbish Property

Bridging finance is a short-term loan that can be used for a variety of purposes, including property refurbishment. It can provide quick access to funds for refurbishment projects, but it also comes with its own set of risks.

In this post, we’ll take a closer look at the pros and cons of using bridging finance for property refurbishment, as well as some tips on how to obtain it.

The Pros of Bridging Finance

One of the biggest benefits of bridging finance is speed as it can provide quick access to funds. This can be especially useful for property refurbishment projects, which have multiple property investors interested in the project.

Additionally, bridging finance offers more flexibility in terms of repayment options, which can make it easier to manage your cash flow during the project. Most lenders will allow you to pay the interest at the end, when the property has been sold or remortgaged.

Finally, it allows you to obtain finance on properties that are not mortgageable and allow you time to improve the quality and marketability of the property pending sale or remortgage.

The Cons of Bridging Finance

While bridging finance does have its advantages, it’s important to be aware of the potential downsides.

One of the biggest cons is that bridging finance often comes with higher interest rates than traditional loans.

Additionally, the repayment terms are often shorter, which can make it more challenging to pay off the loan in a timely manner.

Finally, there is always the risk of defaulting on the loan, which can lead to serious financial consequences.

How to Obtain Bridging Finance for Property Refurbishment

Obtaining bridging finance for property refurbishment can seem daunting, but it doesn’t have to be. Here are five steps you can take to make the process as smooth as possible:

Step 1: Research different types of financing options.

Before you apply for a loan, take the time to research different types of financing options. This will help you understand the market.

Yes, you can talk direct to the lender but remember they will be bias and won’t necessarily tell you the points you need to watch out for which may trip you up during the project.

We are also bias as brokers in the sector when we say that you should talk to an experience bridging finance broker who knows which lenders to go to, but more importantly the ones to avoid.

This will help you understand the different terms, interest rates, and requirements required for each option, and determine which type of bridging loan best suits your needs.

Step 2: Determine the amount of financing required.

Knowing how much financing you need is crucial in order to apply for the right type of loan. Consider all the costs of the refurbishment project, including purchase costs, solicitors, materials, labour, and any other expenses that may arise. Always include a contingency of at least 10%.

Step 3: Find a reputable lender.

That’s where we come in. When searching for a lender, it’s important to find one that is reputable and has a good track record.

Look for a lender that specialises in bridging finance for property refurbishment and some of them will also give you a long term Buy to Let Mortgage to pay it off. That reduces costs and increases your profits.

Step 4: Prepare a detailed project plan.

When applying for a loan, you will need to provide a detailed project plan and budget. This should include an estimate of the costs of the refurbishment, a timeline for completion, how it will get repaid and any other relevant information that will help the lender understand the scope of the project. We will help you with this.

Step 5: Submit a loan application and provide all necessary documentation.

Once you have all the necessary information, we can submit your bridging loan application to the lender. Be sure to provide all the required documentation, such as schedule of works, ID and address proof, details of experience and any other information that may be requested by the lender.


Bridging finance can be a useful tool for property refurbishment projects, providing quick access to funds and the potential for higher returns on investment.

However, it’s important to consider the higher interest rates, shorter repayment terms, and the risk of default before making a decision. By following the five steps outlined above and doing your research, you can help ensure that you obtain the right type of loan for your renovation project.

For your next project get in contact with us so we can help you obtain the finance you need.

How to repay your bridging loan quickly.

You are relying on the property being sold or refinanced if you are keeping it.

These are the most common items which cause delays in the refinance process:

– Not starting the process early enough. If you have used a broker to arrange the bridging finance and they are doing the exit keep them updated and provide an expected finish date.

I’d expect to start the refinance exercise approximately one month before this for our clients. It’s surprising how many are so focused on getting the property finished they forget it needs to be repaid.

– Delays in information required by lenders. If we ask for a document we need it. Proof of income by way of accounts and/or tax year calculations and tax year overviews need to be on file. If you don’t it’s surprising how many accountants are on holiday when you ask.

– Bank statements. Check before they are released to make sure there are no items which will concern lenders.

– Make sure your ID is in date and signed and you have a current proof of address that has been posted to you.

Quite often a lender will be able to electronically identify you but if they can’t they will need paperwork to prove who you are and where you live.

– If you have more than four mortgaged properties you are a portfolio landlord so keep a spreadsheet with details of your properties including rental income, balances and mortgage payments. Also check that they have a valid EPC of E or better.

Some lenders may require a business plan and cash flow forecast. If your accounts are up to date this shouldn’t be an issue and your broker should be able to assist you.

– Update the EPC if you think after works it is a C or better as you may get a lower interest rate on the BTL mortgage.

– Buildings Insurance. With most lenders it needs to cover the rebuilding cost in the valuation. A lot of lenders require their interest (their name) on the policy and I’ve seen this delay completion many a time.

-Solicitors. Most are the busiest they have ever been so get regular updates and find out what is outstanding and what you need to do. If you reply on the same day enquiries are raised your solicitor and return paperwork quickly they are more likely to treat the case urgently.

With the odd exception BTL lenders are taking much longer at the moment to assess mortgage applications so have everything ready to submit to the lender at least two weeks before completion of the property.

This way you can send the mortgage application to the lender and by the time they have assessed it and instructed the valuation the property will be finished.

It’s frustrating paying extra bridging interest because completion has been delayed due to a lack of a document which could have been on file weeks ago.

Don’t delay, repay.

If you need any help on arranging bridging finance and/or getting it repaid we’d be happy to help.

Choose the Best Bridging Finance Broker for Property Investment

What do you do when you are looking for bridging finance? You’ll instruct a few brokers and see what they come up with. Sounds simple but could be one of the worst things you do!

Why do you ask?

The bridging and development world is very small. For some transactions there are only a few decent lenders. If a lender gets the same enquiry from multiple brokers it can go against you.

The lender may think you are desperate for the money which will concern them, it’s duplicated work for them and as each broker has their own questioning style they may get different facts on the same case which may put them off.

There is nothing wrong with contacting more than one broker but you only want to instruct one.

We’ve recently submitted a case for £2m to one lender who had received exactly the same enquiry from another broker. We had already received terms from that lender and they refused to issue any more until the client made a choice of the broker they wanted to work with.

Do your homework on the broker before you make a choice:

  • Do they understand what you need.
  • Do they arrange bridging finance daily or is it once a year.
  • Do they talk about how the bridge will get repaid.
  • If the exit is a remortgage can they arrange the finance as not all brokers do.
  • Are they regulated by the Financial Conduct Authority (FCA) . Now the FCA doesn’t cover most types of bridging, however it’s a badge of regulation within the finance sector. A lot of bridging lenders will only deal with brokers who have this registration. If the broker doesn’t, it means they don’t have access to a lot of the market.
  • Do they talk about the loan conditions, the legal process, what happens if repayment is late, are your solicitors any good, interest rate calculations, is the term long enough.

I use to be a director of a bridging company so ask questions a lot of brokers may not. We want you to sleep at night and not to be worried about your interest rate going up to 30% tomorrow, because the broker didn’t notice this when they arranged the bridging loan!

Don’t just focus on the interest rate

Would you go back to this restaurant?

-The food is usually late

-Sometimes they bring out the wrong meal

-The waiting staff ignore you

-You wait an hour to be served

-They tell you the wrong ingredients in a meal

-Their service is slow

-The front of house is very pleasant and is always telling you about the quality of the cooking and service. But reality is different, and they get ignored by the chefs.

-They care more about touting for awards than service

-The restaurant owner is aware of all this but doesn’t do much to change this

I presume the answer is no, so why are some BTL mortgage lenders like this?

Thankfully there are plenty that are the opposite so you can still get a great meal.

Next time you’re looking for bridging finance or a BTL mortgage ask about the service, as price isn’t everything.

How do you find the best bridging finance lender?

Whether you are a property developer or property investor one of the most common questions we get asked is who is the best bridging lender? 

Plenty think they are, especially the ones who are focused on awards but these don’t necessarily mean best.

Best can be:

-Quickest ☑
-Lowest cost over period of loan – This is overall cost rather than rate as there can be exit fees☑
-Least information required – this should never select a lender❎
-Rate and amount of loan aren’t changed unless there is a very good reason☑
-Always deliver, as some don’t always have the money to complete☑
-Will treat you fairly if you are late in repaying your loan rather than take you straight to court☑
-They have good valuers and solicitors that can work with you☑

The ideal scenario is all of them and thankfully we have plenty on our panel who meet the above but very dependent on you, the property and the deal.

Best isn’t always the cheapest rate so if in doubt happy to chat.

What is whole of market in Bridging Finance?

Does this phrase give you the comfort you need when looking for a bridging finance broker?

” we will search the whole of the market for you “

I’d expect your answer to be yes but do your homework first on the broker as this statement can’t be delivered.

Check they have Financial Conduct Authority (FCA )regulation. It should be at the bottom of their website and emails and it’s easy enough to check on the FCA register.☑

Most bridging finance isn’t regulated but the majority of lenders still require the regulation from the broker to accept business.

Recently we’ve been asked to refinance a bridging loan where the client is currently paying 1.25% per month. Ouch 😱

As well as entry fees for the loan there is an exit fee of one months interest. When I saw the rate I thought there was something particular unusual about the transaction or the circumstances. I couldn’t find anything and I’d have expected the costs to be 50% lower

The broker who had arranged the bridging loan for our new client is an unregulated broker who can place business with very few lenders, but the client was sucked in by their promise of searching the whole market for them. 😡

In reality their broker will only deal with a handful of lenders who usually charge much higher rates than the rest of the market.

There is no such thing as whole of market, as nobody has a relationship with every lender.

Finding a good bridging loan starts with a good broker who is regulated by the FCA.

Why a valuation for bridging finance is needed

When you are looking for Bridging Finance are you happy when a lender doesn’t want a valuation?

The answer from most of our clients is yes, as it’s a cost saving and makes the bridging finance process quicker. But as we’ve seen plenty of examples of why you should always get one.

If you already own the property there is an argument that you don’t need one as you should know the property well enough to identify any major issues.

On a purchase we strongly recommend you get one and preferably your own survey.

We’ve seen properties that have structural issues, Japanese Knotweed in the garden and being next to a sub-station. All of which the BTL lenders who provide the repayment route for the bridge don’t like.

All these issues were there at the point of purchase and all the clients went direct to lenders who offered a no valuation product and hadn’t visited the property.

None of these properties would have been purchased at the price they were, if these issues were known.

A valuer going out would have identified all these problems which would have given them time to pull out or renegotiate the price.

Yes it reduces your initial costs but at what price to the project and your profits?

Update your EPC after a refurbishment

A plea to Property Developers.

You’ve spent thousands on a refurbishment and are now looking to refinance onto a BTL mortgage to get your money back. Why not spend extra on getting a new EPC once you’re finished your project?

Most property developers who come to us for a BTL mortgage to repay their bridging loan have the EPC which was issued when they bought the property. If it’s a D or E these are acceptable to lenders, but some are still F or G which aren’t acceptable to any long term BTL lender.

Nobody has mentioned this to them before. It’s criminal, as a good bridging broker should, because it influences which lender is going to repay the project.

To get a new EPC can delay the repayment of the bridge. One recently has cost the client an extra three weeks interest. It doesn’t sound much, but that £1,300 is now in the lenders pocket rather than the clients.

If the EPC is C then many lenders offer lower interest rates so less to pay each month, increased profits and cash-flow.

Don’t delay, EPC today.

How to compare Bridging Loans

There are a lot of factors to consider when choosing a Bridging Finance Loan.

Clients often focus only on the monthly interest rate and forget all those “hidden” fees and costs.

If you only ask one question it’s how much will it cost me in total?

The key points are:

  • Interest Rate: Is it calculated daily or monthly?
  • Do you know what interest rate applies for the whole term of the loan as some lenders start off with a low rate then increase it?
  • What is the minimum period they will charge you? It’s usually one – three months but we’ve seen it as high as nine!
  • If you are late in repaying the loan will the rate increase, is there be a monthly fee and will you be in court soon?
  • Do you know the rate will you pay before you part with your money to pay the valuer? Some lenders are known to quote rates from.
  • What is the arrangement fee?
  • Does an exit fee apply? If yes are they based on the interest rate or loan amount or GDV of project?
  • Is the term of the loan long enough to finish the project and exit the bridge?
  • What value will the lender work off. There are at least three – Open market,180 day and 90 day.
  • Does the lender accept title insurance/search indemnities to speed up the process.
  • How good are the lender’s solicitors? Some are very slow.

A good bridging broker will know the answers to these questions. We also know the lenders who deliver and those we need to avoid.

Finally how will it get repaid. If you are keeping the property some bridging lenders will also do the long term loan. That’s worth knowing!

Bridging Finance for refurbishment of property

Light Development Finance

This is ideal for professional developers. You have the deposit, can cover the interest and fees, but could do with some help on the refurbishment costs. This product may be perfect for you.

A minimum loan size of £200,000 with a Day 1 loan of up to 75% LTV and a projected gross development value of 70%. You need a minimum of 20% profit on all costs.

Up to 100% of costs of works funded in arrears so you need working capital to cover the first 4-6 weeks of costs, the deposit and the fees.

Permitted uses for the product:

  • PDR schemes
  • Property conversion to residential / HMO
  • Heavy property refurbishment and extension
  • Finish and exit

It’s not for ground up development as we have other lenders for that. Legals and valuation at cost with no lender mark up.

Contact us now for a detailed quote.

Light Refurbishment Bridging on Property & Costs

Shawbrook initially launched this light refurbishment product to a limited panel including Searchlight.  Now, normally you would fund the costs out of your own money, which can limit the number of projects you do.

Shawbrook will provide additional borrowing as long as:

Maximum initial loan 75% of lower of the purchase price or value. The total loan including purchase is not higher than 85% of the initial purcahse price or 70% of the end value.

A recent example for an experienced developer.

Purchase Price £150,000
Costs to refurbish £45,000
End Value £260,000

What happened

Day 1 loan of £112,500 – 70% of the end value is £182,000 and 85% of purchase price is £127,500 so maximum total loan based on the lower figure is £127,500. Deduct the initial loan of £112,500 and the developer has an extra £15,000 from the lender towards their build costs. This was put towards another purchase which previously they could not afford.

Commenting on this significant development, Emma Cox, Sales Director, Shawbrook Commercial Mortgages;

“We have worked tirelessly over the past five years to improve this important element of our product offering, and 2018 represents a real success story for the Shawbrook STL range. The ability to borrow 100% of refurbishment costs under one facility can be critical for investors looking to add value and develop their portfolios, and we are delighted to be able to support this activity.”

“While the product range continues to evolve in response to market demand, we have managed to keep all the old benefits in place to help our brokers and their customers build for the future. The 0.25% discount remains available for repeat borrowers with no minimum interest periods or ERCs, and we are also pleased to retain a great deal of flexibility for borrowers with the maximum 24-month term providing time to refinance or sell.”

Bridging Finance – How strong is your exit route?

Do all lenders care about the exit?

Not wanting to be too controversial but various cases have led me to the conclusion that not all lenders look in detail on how they are going to get repaid. I must stress it is some and not all.

Being the rare breed that I am of broker, landlord and experience of running a bridging company, the exit does concern me. Now three cases were all presented by other brokers to lenders with repayment coming from a remortgage. All had major holes in that strategy and the risks were never explained to the client by either the broker or the lender.

1. A six-month loan at a low rate when the client needs nine months. To extend costs far more than a nine-month term with another lender.

2. A remortgage to a limited company whose main director/shareholder had adverse credit as long as your arm but the broker put the exit down as a remortgage and the lender never checked.

3. A valuer saying there was asbestos in the property but no specialist report being requested.

4. A recent case has got me thinking about how little due diligence is done by some lenders on the exit. We have another broker introducing Steve to a bridging lender to convert a guest house into an HMO. The deal gets done, refurbishment goes to plan and after several weeks of the client not getting the exit I get the call to sort out the repayment. Steve meets the criteria of the HMO lenders.

I ask him about planning and he tells me it has established use. I say prove it as that’s what the lender will need. He then comes back to me and says it doesn’t have planning and has to apply for it. So he has spent his money on a property that has planning for a guest house. Now he admits he missed it but this was never discussed by the lender or the broker. Surely their solicitors knew as well?

What does that mean to the bridging lender? Well the cynic in me says another two-three months of receiving interest and the bigger cynic the possibility of default interest. Now I hope I am wrong but I can’t see any reason why the lender did not identify this and bring it to the client’s attention.

Now that’s four cases where their broker gave them a product that was never going to work. Clients weren’t aware of it and it has cost them all financially, never mind the stress and anxiety.

At Searchlight, we work on the exit first and if it can’t be provided by multiple lenders we won’t do the bridge.

Contact us now to see how we can help you as we don’t expect this product to be around for long


Searchlight Finance Ltd is a broker not a lender.

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We are a credit broker not a lender.

Searchlight Finance Ltd is registered at 98, King Street, Knutsford, Cheshire, WA16 6HQ. Company Register number is 07929050.

Authorised and Regulated by the Financial Conduct Authority. Our FCA registration number is 743220. You can check via www.register.fca.org.

We are registered with the Information Commissioner’s Office, Z3109319 and you can check via www.ico.org.uk.

We conduct both regulated and unregulated business and therefore not all products provided through us are regulated by the Financial Conduct Authority.

We source finance from the whole of market and may receive commissions that will vary depending on the lender, product, or other permissible factors. The nature of any commission model will be confirmed to you before you proceed.

Member of National Association of Commercial Finance Brokers (NACFB).