34% had used their personal savings and 18% had funded the refurbishment using credit card debt or an overdraft.
A leading buy to let lender says greater education is needed on the refurbishment finance options available to landlords, after its research found that a third are using their personal savings to fund projects.
The survey found that one in eight landlords are unaware what type of finance is available to them for refurbishment.
Of those who had undertaken a refurbishment recently, 34% had used their personal savings and 18% had funded the refurbishment using credit card debt or an overdraft. In addition, those that haven’t yet refurbished a property primarily also expect to rely on credit card and overdraft debt (32%) or personal loans (31%).
However, of those landlords that had used finance to fund their refurbishment in the past, remortgaging was a popular option. 18% had used a remortgage buy-to-let loan, with a further 30% expecting to use this option for future refurbishments.
31% of landlords that would use mortgage finance said that they would like the ability to access smaller sums from a loan facility during the project to help them maintain their cash flow and keep their risk exposure down. However, 30% of landlords would choose to access a lump sum from a lender at the outset of a project.
According to the report, landlords will spend £12,000 on average per refurbishment, with many doing so to improve the quality of the property. While light refurbishments were more popular, heavier scale projects could add an average of £96,000 to a property’s value from a £40,000 outlay.
Andrew Wattsford, Principal Finance Broker at Wattsford Commercial Finance commented: “Refurbishments can be a great for landlords to both increase the attractiveness of their properties and value, many landlords are unaware that their are several finance options available.”
“Landlords don’t and shouldn’t need to rely on using their own personal funds to improve their properties. There are an increasing number of options for landlords from remortgaging to bridging loans which makes a refurbishment much more feasible and likely.”
“Landlords value flexibility highly when it comes to choosing finance products for a renovation. This means finding the right product to fit the landlords’ circumstances. Brokers, such as ourselves play a valuable role in ensuring that landlords have access to the right finance options so it’s important that they understand the range of support and flexible products that lenders are able to provide.”
Source Financial Reporter