Finance guide · 1 minute readFinancing a property that needs modernisation

Light or heavy refurbishment

Light refurbishment is cosmetic: kitchens, bathrooms and decoration. Lenders typically lend up to 75% of the price on day one, plus the works. Example rates: 0.85% to 1.05% a month.

Heavy refurbishment covers structural work, rewiring, new heating, extensions or a building that cannot be lived in. Day-one lending is usually lower, about 70%, with the works released in stages. Example rates: 0.9% to 1.15% a month.

How the works are paid for

The works are released in stages, after a surveyor for the lender checks each one is done. You fund each stage first, or the lender pays it against invoices. Most lenders fund up to 100% of the agreed works, within a cap on the value after works.

• A schedule of works with costs
• A builder's quote, and building control where needed
• A contingency of 10 to 15% for what you find when the walls come off
• Vacant possession: lenders do not fund works with a tenant in place

The value after works, and the exit

The lender values the property as it will be when finished. That value, backed by sales of similar finished homes nearby, decides how much you can borrow and whether the sale or refinance repays the loan. Each lot page shows the closest comparable sales for this reason.

If you plan to let, remember that a rented home in England and Wales must meet the minimum energy efficiency standard: an EPC rating of E or better.

See it on a real lot

Every lot on Auction Watch has a finance view and a calculator that opens on the loan that fits it, with indicative terms on screen in a minute.