Light, medium or heavy: why it matters
Lenders grade a refurbishment by the cost of works compared with the property's value today. The grade decides the product, the rate and how the works money is released.
| Type | Works vs current value | Typical work | Max LTV |
|---|---|---|---|
| Light refurbishment | up to 25% | New kitchen and bathroom, rewire, decoration, no planning needed | 70% |
| Light development | 25% – 50% | Reconfiguration, extensions, loft conversions | 70% |
| Medium refurbishment | 50% – 100% | Structural work, change of use, HMO conversions | 65% |
| Heavy refurbishment | over 100% | Full strip-out, conversions needing building regulations and planning | 65% |
Medium and heavy projects are also limited to around 70% of the gross development value (GDV), the property's value once the works are finished.
How the works money is released
On light refurbishments the works can sometimes be funded up front with the purchase. On larger projects, the lender releases the works budget in stages, in arrears: you complete a stage, the lender's monitoring surveyor checks it, and the money for that stage is released. Plan your cash flow so you can fund each stage before it's repaid to you.
What lenders will want to see
- A schedule of works with costs, ideally from a contractor.
- Your experience, or the experience of your contractor or project manager on bigger jobs.
- Planning permission and building regulations where needed.
- The expected value once finished, supported by comparable sales or rents.
- Your exit: sale, or refinance onto a buy-to-let or commercial mortgage.
Refurb-to-let with one set of fees
If you plan to keep the property, there are products that combine the purchase, a light refurbishment and the long-term buy-to-let in one facility: one set of fees, one set of legals, and no minimum ownership period before switching onto the term rate. Ask us whether your project fits.
Frequently asked questions
Do I need experience for a heavy refurbishment?
Heavy projects usually need some track record, either yours or your professional team's. First-time investors are better suited to light refurbishments, which most lenders consider at any experience level.
Can the works be 100% funded?
Lenders normally fund the works in full on top of the purchase loan, subject to the overall limits on LTV and loan to GDV. You'll still need a deposit for the purchase.
What if the works run over budget?
Cost overruns are usually yours to fund. Build a contingency of at least 10% into your budget, and tell us early if the project is changing so we can talk to the lender.