Light Refurbishment: Purchase or Refinance Property Needing Renovation
The Light Refurbishment Solution
The light refurbishment mortgage can be utilised to purchase, or remortgage, a property needing limited repairs, redecoration and refurbishment. It is suitable for most single dwelling buy to let investment property and HMOs. Light refurbishment of investment property before letting
- Single AST Tenancy BTL Light Refurbishment Mortgage
- Multiple tenant HMO property Light Refurbishment Mortgage
Accepted Property for Light Refurbishment and Renovation
- Buy to Let property
- Multi-tenant HMOs
- Mixed use
- Commercial
Reasons to use a Light Refurbishment Mortgage
- Purchase property in non-letting condition
- No rental calculation on purchase
- Mortgage from day one
- Remortgage within 6 months
- Capital raise at improved value within 6 months
Types of Property Accepted for a Light Refurbishment Mortgage
- Residential Investment BTL
- Homes in multiple occupation
- Mixed use property such as flats above a retail shop
- Semi commercial property
- Commercial use property
About the 6-Month Remortgage Rule
The 6-month is rule observed by virtually all residential and buy to let lenders protects against artificial house price inflation as we began to see in the property boom around 2003 – 2008. In the boom, we saw property investors buying at one price on one day and remortgage days later on a drawdown facility. The refinance was based on a higher valuation with none or negligible improvements ever carried out that could justify the hike in valuation in such a short period. While the majority of lenders enforce a 6-month period, some use a 12-month period in which the property cannot be refinanced at a higher value. Light Refurbishment Products Property investors and developers who legitimately add value to a property, either by a full refurbishment schedule of works or by simply making the property mortgageable, for example, by replacing broken kitchen or bathroom fixtures, can utilise light refurbishment products and refinance within 6 months
Typical Light Refurbishment Work
- Installing new kitchen or new bathrooms
- Electrical rewiring, plumbing
- Re-plastering or exterior rendering
- Cosmetic improvements, redecoration etc.
- Installation of central heating system
- Remedial work such as damp proofing or Timber treatments
- New floor coverings
- Works limited to non-structural changes
- Work that does not involve building regulations
- Does not require planning permission
- Usually not more than 30% property value
Light Refurbishment and Renovation Details at a Glance
- First Legal Charge
- 80% LTV on purchase
- 85% Improved value
- No ERC
- No minimum income
- Roll up of interest
- Interest only available
- Single tenant BTL
- Multi-tenant property
Overview of the Light Refurbishment Mortgage
The Light Refurbishment mortgage can be used for many situations where the property needs some form of work to be carried out before it can be let to a tenant. Other renovations may be carried out to increase market appeal or rental value or to capitalise on uninhabitable property purchased at auction. In some instances, a home missing only a functional bath or WC would not be mortgageable with conventional Buy-to-let mortgage lending, a light refurbishment product offers a viable solution to avoid mortgage retentions or needing bridging finance.
Typically light refurbishment would limited to non-structural work and other work that would not need planning permission or other building work that needing to be regulated under building regulations. For renovation programs that would incorporate change of use or planning consent, such as converting a single dwelling to multiple dwellings, the medium or heavy refurbishment finance products could be used.