House Refurbishment Budget Blown? A Small Bridging Loan Could Be Your Lifeline!
Running out of money mid-refurbishment is every property developer’s worst nightmare. Whether you’re a seasoned investor or a first-time renovator, unexpected costs can derail even the best-planned projects. But don’t panic – a small bridging loan could be the quick and flexible solution you need to get back on track.
What Is a Small Bridging Loan?
A bridging loan is a short-term finance option designed to “bridge the gap” when cash flow is tight. They can be used for a variety of property-related needs, including covering unexpected costs in a refurbishment project.
Small bridging loans typically range from £5,000 to £100,000, making them ideal for developers, investors, and homeowners who need a financial boost to complete their project. However, not all lenders offer loans at this level, as some have a minimum threshold of £100,000 or more.
How Do Small Bridging Loans Work?
A bridging loan is a secured loan, meaning you need to offer a property as security. This could be:
- A first charge loan: The lender takes primary security over the refurbished property.
- A second charge loan: If you already have a mortgage or another loan secured against the property, the bridging loan takes second priority.
- Security against another property you own, which gives you more flexibility.
These loans are short-term, typically lasting from a few months up to a year, and are repaid when you refinance, sell the property, or receive funds from another source.
Why Choose a Small Bridging Loan?
- Speed – Unlike traditional bank loans, bridging loans can be approved and funded in days, not weeks.
- Flexibility – They can be tailored to suit your project’s timeline and financial needs.
- Access to Funds – If your project is at a standstill due to a budget shortfall, a bridging loan can provide the cash injection required to finish the job.
- Preserve Your Investment – Completing your refurbishment increases your property’s value, maximising your return on investment.
Case Study: How a Small Bridging Loan Saved a Renovation
John, an experienced property investor, had a house renovation project that was near completion when he ran out of funds due to unforeseen structural repairs. Traditional lenders were unwilling to help on short notice, but a £40,000 small bridging loan secured against another property allowed him to finish the renovation and sell the house at a healthy profit. Without bridging finance, his project would have stalled, incurring extra costs and delaying his returns.
Things to Consider Before Applying
- Exit Strategy – Lenders will want to know how you plan to repay the loan. This could be through a sale, refinancing, or another financial arrangement.
- Interest Rates & Fees – Bridging loans tend to have higher interest rates than traditional loans due to their short-term nature. Always check for additional fees such as arrangement costs or legal expenses.
- Loan-to-Value (LTV) Ratio – The amount you can borrow will depend on the value of the property you’re using as security.
- Lender Comparisons – Not all bridging lenders offer small loans. Some have a minimum loan size of £100,000, while others specialise in smaller amounts. Working with a broker can help you find the right lender for your needs.
Step-by-Step Guide to Applying for a Small Bridging Loan
- Assess Your Needs – Determine how much you need and what property you can offer as security.
- Choose the Right Lender – Not all lenders cater to small bridging loans, so compare options carefully.
- Prepare Your Exit Strategy – Be ready to explain how you’ll repay the loan.
- Submit Your Application – A broker can help speed up the process and connect you with the right lender.
- Get Approved & Receive Funds – Once approved, funds can be transferred within days, allowing you to get back to work.
How to Apply for a Small Bridging Loan
At Sunrise Commercial Finance, we specialise in securing fast and flexible bridging finance for developers, landlords, and property investors. We work with lenders who offer small bridging loans starting from £5,000, ensuring you have access to the funds you need, when you need them.
If you’re in the middle of a refurbishment project and funds are running dry, don’t let the opportunity slip away. Get in touch today and let us help you find the perfect solution to get your project over the finish line!
For more information contact us for a fees free chat.
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📞 Call us at 07939 091418
📧 Email: john@sunrisecommercial.co.uk
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