Can I Still Get a Refurbishment Bridging Loan with No Experience Together with Poor Credit?
If you’re a property investor or developer in the UK with less-than-perfect credit, you might be wondering if you can still secure a refurbishment bridging loan to fund your next project. The good news? Yes, you can—if you know where to look and how to position yourself.
Bridging loans are a flexible financial tool, often used for property purchases and refurbishments when traditional mortgages aren’t an option. Unlike high-street lenders who focus heavily on credit scores, many bridging lenders assess the overall investment potential, making them more accessible for those with adverse credit histories.
This guide will walk you through how to get a refurbishment bridging loan with poor credit, what lenders look for, and how to strengthen your application. Plus, we’ll explore real-life case studies to illustrate key points.
What is a Refurbishment Bridging Loan?
A refurbishment bridging loan is a short-term loan designed for property investors who need quick funding to renovate or improve a property before refinancing or selling. These loans are ideal for projects like:
- Light Refurbishments: New kitchens, bathrooms, redecoration, or minor structural repairs.
- Heavy Refurbishments: Extensions, loft conversions, and significant structural changes.
Bridging loans typically last 6-24 months and can be repaid through the sale of the property or refinancing onto a long-term mortgage.
Can I Get a Refurbishment Bridging Loan with Poor Credit?
Yes, securing a refurbishment bridging loan with poor credit is possible because lenders primarily focus on the project rather than just your credit score. Here’s how lenders assess your application:
1. The Strength of the Deal
Lenders want to know:
- The property’s value and potential post-refurbishment value (GDV).
- How much you’re investing in the refurbishment.
- The projected profit or rental income.
2. The Exit Strategy
How will you repay the loan? Options include:
- Selling the property post-refurbishment.
- Refinancing onto a long-term mortgage (even with bad credit, some specialist lenders will consider you).
- Using proceeds from another project or investment.
3. Experience & Track Record
While experience isn’t always necessary, lenders may favour applicants with a history of successful projects. If you’re new, partnering with an experienced developer or hiring a reputable contractor can strengthen your case.
4. Deposit & Loan-to-Value (LTV)
With poor credit, you may need to put down a larger deposit. Many lenders offer up to 75% of the property’s purchase price and may fund 100% of refurbishment costs.
How to Improve Your Chances of Approval
If you have poor credit, follow these steps to boost your chances of getting a refurbishment bridging loan:
1. Work with a Specialist Bridging Loan Broker
A broker with expertise in bridging and development finance has access to specialist lenders who are more flexible with bad credit applicants.
2. Provide a Strong Business Plan
Detail your project, refurbishment budget, timescales, and anticipated profit. A well-prepared plan reassures lenders that you’re organised and have a clear exit strategy.
3. Offer Additional Security
If you have other properties, offering additional security can improve your application and reduce lender risk.
4. Improve Your Credit Profile
While bridging lenders are less focused on credit scores, reducing outstanding debts and avoiding new adverse marks on your credit file can help.
5. Consider a Joint Application
If your partner or business associate has a stronger financial background, applying together could strengthen your case.
Case Studies: Bridging Loans for Investors with Poor Credit
Case Study 1: First-Time Investor with CCJs
Background: Sarah, 45, wanted to purchase a rundown 2-bed terrace in Manchester for £120,000 and spend £30,000 on refurbishment. However, she had two County Court Judgements (CCJs) from a previous business failure.
Solution: A specialist lender provided a 75% LTV bridging loan covering the purchase and 100% of the refurbishment costs. Sarah’s strong exit strategy (selling the property for £200,000) reassured the lender, allowing her to secure funding despite her CCJs.
Case Study 2: Experienced Developer with Late Mortgage Payments
Background: James, 52, had developed multiple properties but had a few late mortgage payments affecting his credit score. He found a semi-detached property for £180,000 with a potential GDV of £300,000 post-refurbishment.
Solution: With a broker’s assistance, James secured a 70% LTV bridging loan with an interest rate of 0.85% per month. His past experience and clear exit strategy (refinancing onto a buy-to-let mortgage) convinced the lender to approve the loan.
The Cost of a Refurbishment Bridging Loan with Poor Credit
While interest rates can be higher for applicants with poor credit, specialist lenders offer competitive terms based on the project’s strength. Key costs include:
- Interest Rates: Typically 0.84% – 1.5% per month.
- Arrangement Fees: Usually 1-2% of the loan amount.
- Valuation Fees: A surveyor will assess the property’s value.
- Exit Fees: Some lenders charge an exit fee, but not all.
Frequently Asked Questions
1. Will my credit score affect the interest rate?
Yes, but lenders focus more on the deal than your score. A strong investment project can offset poor credit.
2. Can I get 100% funding for refurbishment costs?
Yes, if the loan is structured correctly, many lenders offer 100% of refurbishment costs as long as the overall LTV doesn’t exceed their criteria.
3. What’s the fastest way to get a decision?
Work with a specialist bridging loan broker to speed up the application and get tailored lender options.
Final Thoughts
Having poor credit doesn’t mean you can’t secure a refurbishment bridging loan. By focusing on the deal’s strength, exit strategy, and leveraging a specialist broker, you can still obtain funding for your next property project.
If you’re an investor or developer looking for a bridging loan but have concerns about your credit history, get in touch today for expert advice and tailored solutions.
For more information contact us for a fees free chat.
https://www.sunrisecommercial.co.uk/
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