Refurbishment Bridge Calculator

Understanding Refurbishment Bridging Finance

Refurbishment bridging is specifically designed for property renovation projects where you need to purchase and fund works before refinancing or selling. This calculator models the complete financing structure and project economics.

How This Calculator Works

1. Property Values Enter your purchase price, current market value, refurbishment budget, and expected After Repair Value (ARV). The ARV is crucial - it determines your GDLTV and ultimately whether the deal stacks.

2. Refurb Type Selection Choose between light and heavy refurbishment:

Light Refurb (cosmetic works): - Decoration, kitchens, bathrooms - No structural changes - Up to 75% GDLTV - Lower rates: 0.75-1.1% per month

Heavy Refurb (structural works): - Extensions, conversions, layout changes - Requires detailed plans and monitoring - Up to 70% GDLTV - Higher rates: 0.85-1.25% per month

3. Drawdown Structure This significantly affects your interest costs:

Staged (most common): Refurb funds released in 3-4 tranches as works complete and are inspected. You only pay interest on funds drawn, saving money if works take time.

All Upfront: Full refurb released on Day 1. Higher interest cost but useful if you want full control of funds without inspection stages.

In Arrears: Funds released after works certified. Lowest interest cost but you need to fund works yourself first.

4. Finance Terms Configure interest rate, term, and all fees. The calculator then shows your GDLTV compliance, total finance costs, and project returns.

Understanding GDLTV

GDLTV (Gross Development Loan to Value) is the key metric lenders use:

GDLTV = (Purchase Loan + Refurb Funding) ÷ After Repair Value

Example: £150k purchase loan + £50k refurb = £200k facility on a £280k ARV = 71.4% GDLTV

For light refurb, lenders allow up to 75% GDLTV. For heavy refurb, typically 70% max. The calculator flags if you exceed these limits.

Interest Cost Modelling

The calculator models interest based on average drawdown: - Staged: Assumes 50% average refurb exposure over the term - Upfront: Full facility from Day 1 - Arrears: Purchase loan only until completion

This gives a realistic estimate of total interest rather than worst-case on full facility.

Project Return Metrics

Profit on Cost: Total profit ÷ total project cost. Target 15%+ for viable projects, 20%+ for strong deals.

Return on Equity: Profit ÷ your cash invested. Shows how hard your money is working. Good projects achieve 30%+ ROE.

What ARV Uplift Should You Target?

For a viable refurb project: - ARV should be at least 125% of total cost (purchase + refurb + finance) - This provides profit margin and refinance buffer - Example: £200k purchase + £50k refurb + £20k costs = £270k. Target ARV: £340k+

If your ARV only provides 10-15% uplift over total cost, the deal is marginal - any cost overrun or value shortfall eliminates your profit.