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Light renovation & refurbishment mortgages

In many instances where a property is not suitable to be inhabited straight away a lender may produce a mortgage offer with a retention of funds.

This is where all or part of the mortgage is held back until certain crucial work is carried out on the property to make it habitable.

Typically on buy to let properties lenders will ask for a full retention of the mortgage funds until work has been completed to bring the property up to habitable condition.

This frequently causes buy to let mortgage deals to fall flat as it is very difficult for most people to buy a property outright or to carry out the work required prior to securing finance to buy the property.

Light renovation mortgages allow the purchaser to draw down the majority of the loan to buy the property and then secure the rest of the mortgage once work has been carried out.

There will normally be a re-inspection of the property to ensure the work has been done prior to the rest of the mortgage funds being made available on a light renovation mortgage.

The Pros and Cons of light refurbishment finance

Pros:

  • Avoid a full retention of mortgage funds
  • Can be cheaper than bridging loans
  • Allows purchase of property where sufficient funds are available to undertake work but not for full purchase

Cons:

  • Bigger deposits required
  • Higher fees and rates
  • Higher redemption penalties
  • Some retention of funds will be made until renovation is carried out

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THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBT SECURED ON IT. YOU DO NOT HAVE TO PAY A FEE FOR OUR SERVICES AS WE RECEIVE COMMISSION FROM LENDERS. IF YOU PREFER YOU CAN PAY 1% FEE ON COMPLETION AND WE WILL PAY ANY COMMISSION WE RECEIVE TO YOU. SOME BUY TO LET AND COMMERCIAL LOANS ARE NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY
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