Refurb-to-let and renovation mortgages
Refurbishment Mortgages
One application, two phases: bridging-style funding while you do the renovation work, converting to an agreed buy-to-let mortgage at the improved value the day the property is ready to let. The product that takes refinance risk out of renovation.
Typical refurb-to-let terms
Refurbishment mortgage, renovation mortgage, refurb-to-let: one product, three names
Lenders use the terms interchangeably: a refurbishment mortgage, a renovation mortgage and a refurb-to-let product all describe the same two-phase structure, and comparison sites list the same products under renovation mortgages, renovation finance and house renovation loans. The lender agrees both phases at application: a works phase priced like a light bridging loan, and a term buy-to-let phase at 6.0 - 7.5% pa that begins when the renovation is complete and re-inspected. You borrow against the property as it is, do the work, and step onto the term mortgage at the improved value without a second application, a second underwrite or a second set of legals.
The renovation itself must usually be light: kitchens, bathrooms, rewiring, redecoration, a property brought from tired to lettable. Structural renovation work, planning and change of use push the project into heavy refurbishment finance territory, where the exit is planned rather than pre-agreed.
Why renovation projects fail at the refinance, and how this product prevents it
The classic failure mode of a buy-refurbish-refinance deal sits at the back end: work done, money spent, value created, and the refinance market has moved. Criteria tightened, the valuer disagrees with your end value, or the six-month rule blocks the remortgage you planned. A renovation mortgage closes that gap by underwriting the exit before the renovation begins: the term rate, the LTV and the conversion conditions are contractual from day one.
You pay for the certainty with scope limits and a smaller panel. Whether the trade is worth it is arithmetic we run deal by deal, and sometimes the honest answer is a plain refurbishment bridging loan with a whole-of-market remortgage after the works. Our BRR financing guide covers how to make that call.
Who renovation mortgages suit
- Landlords using a renovation mortgage to buy tired stock, renovate and hold, where the let is the plan from day one
- BRR investors on tight margins who cannot absorb a refinance falling through or a six-month-rule delay
- First renovation projects, where one lender, one process and a pre-agreed exit reduce the moving parts
- Portfolio landlords standardising a repeatable buy-renovate-let process across acquisitions
What the renovation mortgage underwrite looks at
Both phases are underwritten together at application. The works phase of a renovation mortgage reads like a light bridging loan: the schedule of works, the day-one value, your experience. The term phase reads like a buy-to-let mortgage: projected rent, interest cover at the improved value, your landlord profile. The projected rent is the load-bearing number, so we evidence it with local letting comparables before submission, which is how the offer survives the valuer's rental assessment rather than dying by it.
Refurbishment and renovation mortgage questions
A refurbishment mortgage (often called a renovation mortgage or refurb-to-let) combines a short works phase with a term buy-to-let mortgage in one application to one lender. During the works it operates like a light bridging loan; once the works finish and the property is re-inspected, it converts to an agreed buy-to-let mortgage at the improved value.
Yes, three ways. A refurbishment mortgage funds works and converts to a term product. A standard mortgage plus a further advance can fund lighter renovation on a property you already own. And where the property is not yet mortgageable, or the works are structural, a refurbishment bridging loan funds the project and you mortgage the finished property. Which route is cheapest depends on the works and how much you need to borrow.
Many mortgage lenders will not lend against a property, or will not lend against its new value, within six months of your purchase. For renovation projects planning to refinance quickly at the improved value, this rule shapes the exit: some lenders apply it strictly, others lend on the improved value sooner with evidence of the works. We place BRR exits with the second group when timing matters.
Only if you borrow more. Renovation adds value and usually rent, so on an investment property the interest cover often improves even as the loan grows. During a refurbishment mortgage works phase, interest is typically retained or rolled rather than paid monthly, so the project itself carries no monthly payment until the term phase begins.
Typically up to 75% of the property value in both phases: 75% of the day-one value during the works, converting to 75% of the improved value on completion. The term phase is also tested against the projected rent, so the achievable borrowing is the lower of the LTV cap and what the interest cover calculation supports.
When you intend to sell rather than keep the property, when the works are heavy (structural, planning, change of use), when the property is currently unmortgageable, or when you want to shop the whole market for the exit after creating the value. The renovation mortgage trades flexibility for certainty; the bridging loan trades certainty for flexibility. The same logic applies when a project outgrows the product: heavy schemes are better served by refurbishment or development finance, where the cost of the facility is priced to the risk of the works.
Talk to us about your project
Tell us the property, the schedule of works and the exit. We will come back with indicative terms, usually the same working day.