Why renovations need bridging finance
Many renovation properties are unmortgageable in their current state. Standard mortgage lenders won't lend on properties without a working kitchen, bathroom, or that have structural issues. Bridging lenders are more flexible and will lend based on the property's future value after renovation.
This makes bridging the go-to funding option for property developers and renovators who buy run-down properties, improve them, and then either sell or refinance onto a standard mortgage.
Light vs heavy refurbishment bridges
- Light refurbishment: Cosmetic work — new kitchen, bathroom, decoration, flooring. Doesn't require planning permission. Rates from 0.45% per month
- Heavy refurbishment: Structural work — extensions, conversions, underpinning, new roof. May need planning permission. Rates from 0.6% per month
- Ground-up development: Building from scratch. Usually requires specialist development finance rather than standard bridging
💡 Get multiple builder quotes before applying for your bridge. Lenders want to see a detailed cost schedule, and accurate budgeting prevents costly overruns.
How renovation bridging works
The lender will assess the property's current value and its Gross Development Value (GDV) — its estimated worth after renovation. They'll typically lend up to 70–75% of the GDV or 100% of the purchase price, whichever is lower.
Funds can be released in stages as renovation work progresses (phased drawdowns), or as a single lump sum at completion. Staged releases are common for heavy refurbishment projects.
Costs and timeline
Budget for 6–18 months of bridging depending on the scope of work. Monthly rates range from 0.45–1.0% with arrangement fees of 1–2%. On a £250,000 bridge for 9 months, expect total finance costs of £12,000–£25,000.
Add this to your renovation budget to ensure the project remains profitable (for investors) or affordable (for owner-occupiers).
⚠️ Always add a 15–20% contingency to your renovation budget. Unexpected costs are almost guaranteed in renovation projects, and running out of funds mid-project can be financially devastating.
Exit strategy for renovation bridges
Your exit is typically either a sale of the renovated property or a remortgage onto a standard mortgage once the work is complete and the property is habitable. Lenders will want to see a credible exit plan before approving the bridge.
For developers, the profit margin after all costs (purchase, renovation, bridging, sales fees) should be at least 15–20% to make the project worthwhile.
Finding renovation bridging finance
A specialist broker can match your renovation project with the right bridging lender. Get matched through Nesto for free.