Light or heavy refurbishment bridging: which do you need?

How do lenders decide whether works are light or heavy?

The valuer and the lender decide, not you. Each lender has its own definitions, but most ask the same questions.

• Does it need planning permission? If yes, it's almost always heavy.
• Does it need building regulations sign-off? Structural alterations, loft conversions and extensions usually do, which points to heavy.
• Is any of it structural? Removing load-bearing walls, underpinning or new floors moves it to heavy.
• How big is the spend against the property's value? Some lenders treat works above a set share of the current value as heavy even if nothing is structural.

Light vs heavy at a glance

How much can you borrow?

For refurbishment, lenders typically fund up to 75% of the purchase price and up to 100% of the build costs, capped at around 65–70% of the gross development value (GDV), which is the property's value once the works are done. Some lenders use the lower of the price and the valuation for the day-one advance.

The two types work differently.

• Light: the loan is mostly a day-one advance against the current value, with the works money often paid at the same time.
• Heavy: a day-one advance against the current value, then the works money in stages. The lender sizes the whole loan against the GDV, so the cap matters most when the build costs are large.

Worked example (illustration only): you buy a house for £400,000, plan £150,000 of heavy works, and the valuer puts the GDV at £700,000. A lender lending 75% of the purchase gives £300,000 on day one, plus up to £150,000 for the works: £450,000 in total. The cap at 65% of GDV is £455,000, so the loan fits. If the GDV came in at £650,000, the cap would be £422,500 and you'd fund the £27,500 gap yourself.

How is the works money released?

On heavy schemes, a monitoring surveyor visits as each stage finishes and confirms the work is done. The lender then releases that stage's money, in arrears. So you pay for each stage first and get it back after the visit, which means you need enough cash to run at least one stage ahead. You'll usually pay the surveyor's fees too.

On light works, the lender is more likely to release the money in one go, depending on the figures.

What will a lender ask for?

• A schedule of works with costings, ideally from your contractor
• A contingency for overruns, commonly 10–20% of the build cost
• Planning permission or a permitted development certificate where needed
• Your experience, or your contractor's, on similar projects
• Your exit: a sale or a refinance on the new value

Why does choosing the right lender matter?

The heavier the refurbishment, the fewer lenders will fund it. The valuation confirms how much work is really needed, so if you apply to a lender that only takes lighter works, the case can be declined, after you've paid for the valuation. Choose a lender that accepts your planned works from the start. That's the main reason to use a broker on refurbishment cases: matching the scheme to the lender before the money's spent.

What about permitted development, HMOs and change of use?

Changing an office or shop to flats under permitted development, or converting a house to a small HMO, sits between the categories. Some lenders treat simple conversions as light or medium; others call any change of use heavy. Article 4 areas remove some permitted development rights, so check with the council first.

Can you bridge an uninhabitable property?

Yes, and it's one of the commonest reasons for refurbishment bridging. A house with no kitchen, no bathroom or a poor EPC rating often can't get a mortgage, but a bridge can fund the purchase and the works, then a mortgage repays it once the property is habitable.

What's your exit after the works?

Usually a sale, or a buy-to-let or commercial mortgage based on the new value. If the works overrun, your refinance can slip past the bridge's term, so build in time. See how to refinance out of a bridging loan.

Buying at auction with works to do? See auction finance.