Refurbishment finance · England & Wales
Refurbishment finance for property that needs work
Fast, flexible funding to buy and refurbish – from light updates to heavy structural works – with money drawn against the project and a clear exit by sale or refinance. From £75k to £10m across England and Wales, decided by the people who lend.
The basics
What is refurbishment finance?
Refurbishment finance is short-term property funding used to buy, improve and/or reposition a building – then repay from the value the works unlock. It is a form of bridging finance built for projects: the money covers the purchase and, where needed, the cost of the works, and the loan is redeemed once the refurbished property is sold or refinanced onto a longer-term mortgage. As it is secured by a legal charge over the property, a refurbishment loan can be arranged in days rather than the weeks or months a term lender takes.
It suits property investors and developers who spot value in a tired asset; an unmortgageable flat, a run-down house, a shop with rooms above – and need capital to make it work before a mainstream lender will touch it. At Proxima Capital we lend from £75k to £10m across England and Wales, and we assess each refurbishment on the strength of the project and the exit rather than a tick-box.
Mechanics
How does refurbishment finance work?
We take a charge over the property as security, agree a loan against its current value and its value once works complete, and release funds. On lighter projects the whole facility is often advanced at completion. On heavier schemes the works element is released in stages – a drawdown against each phase of the build – so you are not paying interest on money you have not yet spent. Interest is charged monthly and the loan is repaid in full at the end of the term from your exit.
Light vs heavy
Light and heavy refurbishment
Lenders split refurbishment into two bands, and the line between them shapes how the loan is structured and priced.
Light refurbishment
Light refurbishment is cosmetic and non-structural: a new kitchen and bathroom, rewiring, replastering, redecoration, new flooring. Nothing changes the footprint or use of the property and no planning permission or building regulations sign-off is needed. These projects are quicker and lower-risk, so more of the funding tends to be advanced up front and the loan often runs over a shorter term.
Heavy refurbishment
Heavy refurbishment involves structural work or a change of use; extensions, loft conversions, removing walls, reconfiguring a house into an HMO, or turning a commercial unit into flats. It usually needs planning permission and building regulations, and the works element is released in stages against the programme. Heavier projects carry more risk, so the loan is structured more carefully around the schedule, the contingency and the projected end value.
We fund both across residential and commercial property, and where a purchase has to complete fast – at auction for instance – we can put refurbishment funding in place inside the deadline.
The strategy
The buy-refurbish-refinance play
Buy-refurbish-refinance – often shortened to BRRR – is the model most of our refurbishment borrowers are running. You buy a property with potential, refurbish it to lift the value and the rent, then refinance onto a buy-to-let or term mortgage on the higher figure, pulling much of your original capital back out to do it again. Refurbishment finance is the short-term money that makes the first two steps possible before a mainstream lender will lend.
The play only works if the numbers stack. The refurbished value has to support both the refinance and the cost of the project – purchase, works, interest and fees – with room to spare. We look hard at the end value, the achievable rent and the buy-to-let rates you are likely to refinance on, because the strength of that exit is what makes the deal safe. Investors flipping for a sale rather than a refinance run the same model with a sale as the exit instead.
Borrowing
How much can you borrow?
Day-one lending is driven by the property’s current value and your loan to value (LTV). Proxima lends from £75k to £10m, up to 75% LTV against residential security, with lower limits on commercial property where the market moves the risk. On top of the day-one advance we can fund the works – usually a large share of the build cost – released in stages, so a refurbishment facility is usually sized against both what the property is worth now and what it will be worth once complete.
Interest is charged monthly, with Proxima rates from 0.85% per month, and you should also budget an arrangement fee – expect 2% of the loan – a valuation, and legal costs. On refurbishment projects the interest is typically retained or rolled up so you are not making monthly payments while the property earns nothing. Our bridging loan calculator shows the gross and net figures, and full detail sits on our rates and costs page.
The thing that matters
Your exit: sale or refinance
A refurbishment loan is only as good as the plan to repay it, and the exit is nearly always one of two things. The first is a sale – you refurbish and sell the finished property, redeeming the loan from the proceeds. The second is a refinance – you keep the property and move it onto a buy-to-let or term mortgage once it is habitable and lettable, using the new facility to clear the bridge. Which one you choose sets the term you need and the value the whole case turns on.
We structure every case around that exit first. If you are refinancing, we sense-check the property will be mortgageable and the rent will support the new loan; if you are selling, we look at realistic sale values and how long they take to achieve. A credible, evidenced exit is what turns a fast decision into a clean completion – and what protects you from a costly overrun at the end of the term. If the exit does not stack up, we will tell you early rather than late.
The line
When refurbishment becomes development finance
There is a point where a heavy refurbishment stops being a refurbishment and becomes a build. As a rule of thumb, if the property remains a recognisable building throughout and the works improve what is already there, refurbishment finance is the right product. Once the scheme involves ground-up construction, major structural rebuilding, or a project where the works cost approaches or exceeds the value of the property you started with, it tips into development finance – which is underwritten against the gross development value (GDV) and released against a professionally monitored build programme.
The distinction matters because the two products price and draw differently, and getting it wrong at the outset costs time. We fund the refurbishment side of that line, so we can tell you early whether your scheme sits with us – and structure it correctly from the start rather than unwinding it later.
Refurbishment with Proxima
A lender that understands the build
Proxima was founded by highly experienced operators who have overseen in excess of £500m of property lending, so you deal directly with the decision-makers and get a prompt decision in principle within 24 hours. We understand programmes, stage drawdowns and end values, and work with best-in-class solicitors and market-leading title indemnity to keep completion fast and certain.
FAQs
Refurbishment finance questions, answered
How does refurbishment finance work?
A lender takes a charge over the property, advances funds against its current value at completion and, on heavier schemes, releases the works element in stages as the project progresses. Interest is charged monthly and the loan is repaid in full at the end of the term from your exit – the sale of the finished property or a refinance onto a longer-term mortgage.
What is the best way to finance a renovation?
For a property you are buying to improve and quickly resell or refinance, short-term refurbishment finance is usually the best fit, because it funds the works and prices for speed. For a home you are keeping long term, a further advance or remortgage is often cheaper. The right answer depends on your timeline and your exit, and we will tell you if a different product suits you better.
Can I borrow the refurbishment costs as well as the purchase?
Often, yes. A refurbishment facility can fund a day-one advance against the property’s current value up to 75% LTV, plus a large share of the works cost released in stages as the project progresses. The total is sized against both today’s value and the projected value once complete, so the numbers have to leave a sensible margin.
What is the difference between light and heavy refurbishment?
Light refurbishment is cosmetic and non-structural – kitchens, bathrooms, rewiring, decoration – with no planning permission or building regulations needed. Heavy refurbishment involves structural work or a change of use, such as extensions, conversions or reconfiguring into an HMO, and usually needs consents. Heavy projects are drawn in stages and structured more carefully around the build programme.
When do I need development finance instead?
Once a scheme involves ground-up construction, major structural rebuilding, or works whose cost approaches or exceeds the value of the property you started with, it moves from refurbishment into development finance, underwritten against gross development value and a monitored build programme. Development finance is not a product we offer, and we tell you early which side of the line your project sits on – so you know from the start whether it is a case we can fund.
Have a deal in mind?
Tell us about it and you’ll get an honest, commercial view the same day – direct from the people who make the decisions.
