Paragon Launches BTL Light Refurbishment Mortgages

Paragon has launched a light refurbishment mortgage which will compete with the offerings of Saffron Building Society and Kent Reliance. At the current time there is one ‘limited refurbishment’ mortgage offered by Paragon, available for residential investment property landlords who wish to carry out refurbishment. More and more landlords are purchasing properties that require some modernisation before letting out. Yet, many of the lenders operating in the ‘vanilla’ BTL mortgage arena require a property to be ‘ready to let’ in order to offer a mortgage on it. Where refurbishment work is required, a full retention often applies.

This Paragon product therefore plugs a much needed gap. The minimum valuation of a property in its pre-work state is £75,000 and 75% of the lower of the purchase price or valuation is available as an initial advance. Paragon’s valuer will confirm the pre and post works valuation and the offer of mortgage will include a ‘retention’ amount thereby facilitating a further advance by prior arrangement of up to 75% of the post-work valuation figure. Minimum and maximum thresholds apply of £2,500 to £25,000 respectively.

Practical example of a limited refurbishment scheme application:-

Purchase price: £80,000

Maximum 75% initial advance: £60,000

Anticipated valuation post works: £120,000

Maximum 75% post works advance: £90,000*

*£90,000 (post works advance) less £60,000 (initial advance) = £30,000, maximum £25,000 retention therefore applies

In the above example, the Offer of Loan will be for £85,000 (initial advance £60,000, post works advance £25,000)

Release of funds:

At completion: £60,000

Post completion of works: £25,000

Other Light refurbishment Solutions:

Although light refurbishment products are currently thin on the ground, there are some solutions offered by BTL lenders, most noticeably Kent Reliance and Saffron Building Society. There are also solutions from commercial lenders such as Shawbrook who have innovative light & heavy refurbishment solutions. So to does the lender Precise with a Bridge-to-Let solution.

For further details, contact one of the team at Harvey Bowes Limited today on 029 2067 6716