Most bridging loans are advanced in one single payment to assist with a purchase or refinance. However, in recent years, refurbishment loans have been designed to enable the costs of improving or converting a property to be funded by the lender as well on a multi-draw down basis.
They are a hybrid of bridging and development loans and allow borrowers to minimise their capital input into a project.
A developer is purchasing an office which has Permitted Development Rights to be converted into 6 apartments.
Purchase Price: £800,000
Development Costs: £400,000 [incl. contingency & all professional fees]
Day One Net Loan: £600,000 [75% LTV]
Further Refurb Funding: £400,000 [100%]
Interest Rate: 0.79% p.m. on drawn funds – fully rolled-up
Developer Cash Input: £200,000 [just 16.67% of total costs]