Refurbishment Loans in 2026: What They Cost and How Lenders Size Them

Type “refurbishment loan” into a search box and the first page hands you two completely different products wearing the same name. Half the results are unsecured personal borrowing for people redoing their own kitchen, priced on salary and repaid over five years. The other half are short dated facilities secured on a building, priced on the property and repaid by a sale or a refinance. The second kind is what this article is about, and the two have almost nothing in common beyond the word refurbishment. If you are a landlord holding a flat that no term lender will touch until it has a working bathroom, or a limited company buying a tired semi to improve and let, the personal loan route is not open to you at the sizes involved. The secured route is, and it funds the purchase and the works in one facility.

Refurbishment Loan, a trading name of Lenzie Consulting Ltd (company number 08174104), is a UK finance arranger and introducer, not a lender. Bridging and refurbishment finance secured on investment property is unregulated lending that falls outside the Financial Conduct Authority’s regulated mortgage perimeter, and the business holds no FCA authorisation because the products it arranges are unregulated. It does not arrange regulated bridging, residential mortgages, or any loan secured on a property the borrower or an immediate family member lives in or intends to live in; those enquiries are referred to a regulated firm. Every figure below is an indicative range, confirmed only in a formal offer, never on a website.

In the episode below, Georgina walks through the light and heavy split and what each one does to the price of the money.

This is investment property borrowing, not home improvement borrowing

The distinction is not pedantry. It decides whether the product exists for you at all. A refurbishment loan of the kind we arrange is secured on a property held for investment: a buy to let, a flip, an auction lot, a shop unit with flats above, a portfolio asset between tenancies. It is written to a private landlord, a special purpose vehicle, a trading limited company or a partnership. It is unregulated precisely because nobody in the borrowing entity is going to live there.

The moment a property is somebody’s home, or is intended to become somebody’s home, the product changes and so does the regulator’s interest in it. We do not arrange that. If you are improving the house you live in, a further advance from your existing mortgage lender or a personal loan is almost certainly cheaper than anything described below, and a regulated firm should be handling it. Everything that follows assumes an investment asset.

The light and heavy split is the whole classification

Every refurbishment deal gets sorted into one of two boxes before a rate is ever quoted, and the sorting decides four separate things at once: the interest rate, the basis the facility is sized on, how the works money physically reaches you, and how many lenders will look at it.

Light refurbishment is cosmetic and non-structural work that needs no planning permission. Kitchens, bathrooms, rewiring, a new boiler and heating system, replacement windows, damp treatment, flooring, full redecoration. The footprint does not change, the structure does not move, the use stays the same. Heavy refurbishment is anything structural, anything that changes the use of the building, or anything that needs planning permission or building regulations sign off. Extensions, loft and basement conversions, removing load bearing walls, splitting one title into three, turning offices into flats.

Classification	What triggers it	Rate band	Sized against
Light	Cosmetic, non-structural, no planning	0.75% to 0.99% per month	Current value, to 75% LTV
Heavy	Structural, change of use, planning or building regs	0.85% to 1.15% per month	Gross development value, to 75% LTGDV

That second column of the table is worth sitting with. Loan to value and loan to gross development value are not variations on a theme. LTV measures the day one advance against what the building is worth in its current state. LTGDV measures the whole facility, purchase money and works money together, against what the finished scheme will be worth. A heavy project on 75 percent LTGDV can end up with a larger total facility than a light project on 75 percent LTV against the same building, because the denominator is bigger. It also carries a valuation risk the light project does not, because the end figure is a forecast rather than an observation.

A lender is not buying your taste in kitchens. It is buying a repayment date, and the works are only the route to it.

How the works money actually reaches you

On a light facility the works element is funded at up to 100 percent of cost, released in arrears. In arrears means exactly what it sounds like and it catches people out constantly. You pay the contractor first, out of your own working capital. You evidence the completed stage with photographs or a short inspection. The lender then reimburses that tranche, normally within a week. Your cash recycles through each stage rather than sitting idle, but you still need enough liquidity to carry the largest single stage before reimbursement lands.

On a heavy facility the mechanism is a monitoring surveyor and a certificate. A quantity surveyor prices the schedule at the outset, the lender’s own surveyor visits at each stage, measures what has been built, and certifies the value of work in place and the cost remaining to complete. Funds release against the certificate. That cycle typically runs every four weeks across four to six stages, it adds a professional fee to the project, and it is the single biggest reason heavy work takes longer to fund than light work.

Worked example: a 1930s semi in Wakefield

An SPV buys a tired three bedroom semi at £185,000. The schedule of works is £34,000 covering a kitchen, a bathroom, a full rewire, a new boiler, replacement windows and redecoration. No walls move, no planning is needed, so it is light. The valuer reports £260,000 on completion. The exit is a refurbishment mortgage.

Line	Figure
Purchase price	£185,000
Day one advance at 75% LTV	£138,750
Works facility, 100% in arrears	£34,000
Total facility	£172,750
Rate, retained, 12 month term	0.89% per month
Interest on the day one advance	£14,819
Interest on drawn works money	£1,424
Arrangement fee at 2%	£3,455
Value on completion	£260,000
Exit refinance at 70%	£182,000

The deposit is £46,250, being 25 percent of the purchase price. Add the arrangement fee, a valuation and both sets of legal costs and the cash requirement before a single tradesman is booked is roughly £54,000. The cost of the money over twelve months is £19,698, being £16,243 of interest plus the £3,455 fee. The refinance at £182,000 clears the £172,750 facility with £9,250 to spare, which is what makes the exit credible rather than hopeful.

Costs that sit outside the headline rate

The monthly rate is the number everyone compares and it is rarely the number that decides which facility is cheapest. A lender arrangement fee of 1.5 to 2 percent is standard and is deducted at completion rather than invoiced. The valuation on refurbishment work reports two figures, the value today and the value on completion, so it costs more than an ordinary mortgage valuation. Legal costs run on both sides and you pay both. Heavy projects add the quantity surveyor and the monitoring fees per visit. Some lenders charge an exit fee as a percentage of the loan or the redemption figure, and that is the line most often left out when two rates are compared side by side.

Interest is usually retained from the advance rather than paid monthly, which means a twelve month facility has twelve months of interest deducted at the outset. That matters for the cash you need on day one, and it is why the useful comparison is total cost of the facility over the term, not the rate per month.

2026 outlook

The Bank of England base rate stands at 3.75 percent, held at the July 2026 decision, and the short dated end of the property lending market has settled with it. Our lender panel is pricing light work from 0.75 percent a month and heavy work from 0.85 percent a month, with the margin above those floors set by leverage, borrower track record and how awkward the security is. Demand is steady rather than frantic: UK searches for refurbishment loan run at about 260 a month, and the related refurbishment bridging loan term at another 260, which tells you the market is active without being crowded. The pressure point for 2026 is not pricing, it is deliverability. Lenders are scrutinising schedules of works harder than they were two years ago, because build cost inflation has made optimistic contractor quotes a genuine source of mid project funding gaps.

FAQ

What is the difference between a refurbishment loan and a home improvement loan? A home improvement loan is unsecured personal borrowing for the property you live in, assessed on your income. A refurbishment loan is secured property finance for an investment asset, assessed on the building and its end value, and repaid by sale or refinance rather than out of salary. We only arrange the second kind, on property nobody in the borrowing entity lives in or intends to live in.

Can a limited company take a refurbishment loan? Yes, and most of what we place is written to a special purpose vehicle or a trading company, usually with a charge over the property, a debenture over the company and personal guarantees from the directors. Pricing is broadly the same as personal borrowing, and the company route generally suits investors who plan to refinance onto a limited company buy to let product afterwards.

How much of the refurbishment cost can be funded? On light work, up to 100 percent of the works cost, released in arrears against evidence of each completed stage. On heavy work, the funding comes as staged drawdowns released against a surveyor’s certificate. In both cases you still need the deposit on the purchase element, typically 25 percent of the price plus fees.

How long does a refurbishment loan run for? Light facilities run 3 to 18 months, heavy facilities 6 to 24 months. Build the term longer than the schedule of works: a six month programme belongs on a nine or twelve month facility, because extension fees and default rates cost far more than the extra months of interest you were trying to avoid.

Talk to us

If you are buying or already hold an investment property that needs work, send us the address, a priced schedule and your intended exit and we will come back with indicative terms from the panel. Start with a refurbishment loan enquiry, or read the detail on light refurbishment finance and heavy refurbishment finance if you already know which side of the line your project falls.

See also: the refurbishment loan calculator for running your own numbers before you enquire.

All figures in this article are indicative ranges for UK refurbishment finance in 2026, confirmed only in a formal offer, and are not an offer, a quote or a financial promotion. Any facility is subject to lender terms, valuation and full underwriting. This article was written by Matt Lenzie.