To refurbish or not to refurbish, that is the question when it comes to maximising the financial return from your property.
If you decide to spend cash on upgrading your property, it will usually be with an eye towards increasing the price that it can attract.
A well-executed and proactive renovation can have a serious impact on both the sale and rental values of your property.
Schofields Insurance calculates that a kitchen renovation could add upwards of £25,000 to your home value, while a loft conversion could make your asking price shoot up by more than £40,000.
With this in mind, there are two main types of bridging loan you can seek to finance your renovation, depending on what you want to achieve.
Light vs Heavy Refurbishment Loans
Private finance firms will distinguish between light and heavy refurbishment when considering your application for an advance of capital.
This generally involves the installation of a new bathroom or kitchen, as well as interior decoration in order to increase the selling price of an investment property.
This will generally require smaller levels of capital investment and can be completed relatively quickly.
Despite costing less, these light refurbishments can have a noticeable impact on the value of a house.
A humble bathroom remodel can add £10,000, and even a simple redecoration of the interior decor could give a home a refined appearance and see the selling value jump by £7,500 according to the Schofields report.
‘Heavy’ projects involve more considerable levels of financing and can involve altering the footprint of a building, via an extension, to expand the size of the home, or convert a larger house into an HMO, ultimately destined for the rental market.
These types of investment are major financial decision, and involve larger loan amounts to achieve.
However, research by Nationwide has shown that an extension that adds a double bedroom and en-suite bathroom can add 23% to the value of your property.
How to finance your project
At Hunter Finance, we offer a range of bridging loans for refurbishment projects that allow investors to renovate or convert existing properties.
As a leading authority on property development financing, we offer bespoke loan structures that take into account your location, previous experience with renovations and property value and help you transform your investment portfolio into a serious money-making opportunity.
Adding value: Where to invest your money