Inheriting property often comes alongside difficult times, and depending on the condition of the property you inherit can often come with problems. If a property is inherited and needs work, it can sometimes be difficult to find funding to pay for the renovations up front.
As a first step, owners will often look to remortgage the property to raise funds for the renovations. If a property is classed as derelict or has an unusable kitchen or bathroom, in most cases, the property will not qualify for a mortgage. Even if you believe a house is habitable and you apply for a mortgage, a valuer may decide that essential work is needed.
If a property needs work, it often leaves the owner with a difficult decision. They could sell the derelict property as it is either privately or through auction. In this case, a developer will usually buy the property at a much lower price, renovate it and then sell it for a profit.
The other option would be for the owner to find the funding for the renovation themselves.
Specialist loans exist for exactly this purpose; a light refurbishment loan is a type of bridging loan that can be used to fund a refurbishment. The loan is taken out for the duration of the refurbishment and is secured against a property. Once the refurbishment is complete, the owner can either take out a mortgage or sell the property to pay off the loan.
A refurbishment loan can provide the money to fund work costing £25k or more and are usually released quickly, allowing the owner to get the ball moving.
Funding a refurbishment this way can seem like a daunting task, but a light refurbishment loan could mean you make the most of your inherited property and don’t lose out to developers.