Broker Guide: Securing incomplete property finance

Broker Guide: Securing incomplete property finance


If one of your clients has found an incomplete or run down property that they wish to purchase in order to carry out major modernisation then a bridging loan is a viable option for them. Bridging and Commercial investigated this type of finance and spoke with some industry experts to get their views on the matter.

This option of finance is especially viable if a client cannot obtain mortgage finance due to the proposed property’s current incomplete and poor condition. In order for them not to miss out on the chance of making a profitable transaction they can use a bridging loan to purchase and complete the renovations. After the renovations have been completed your client can either refinance to a lower rate mortgage deal or sell the property at a profit once the work is complete.


Temporarily funding an incomplete property and its repairs particularly applies to budding property developers, who may have bought a property that is in need of repairs and/or refurbishment. Until the repairs and refurbishment is complete, one won’t be able to have an accurate property valuation, therefore a bridging loan can be used until work is complete and a long term mortgage secured. 


An example of a case for this type of finance is where one has the opportunity to purchase a significantly reduced price because the property requires the completion of renovation work. Due to mortgage lenders requiring a property to be habitable at the time of the mortgage this can prohibit obtaining finance on this type of property. In this instance a lender can obtain bridging finance to purchase the property and carry out the renovations required. Once the property is complete one may have the option to sell/refinance the property and repay the bridge leaving you with a substantial profit.

An incomplete property loan is much like property development finance.  Indeed, when it comes to bridging loans the only real distinction is between open bridging loans and closed bridging loans, the rest are just names for the uses that they are often put to.  There is no need, therefore, to distinguish concretely between property development finance and an incomplete property loan.  If they were exactly the same, however, then there would be no reason to give two different titles.   

You can view incomplete property bridging loans as a subset of property development finance.  Property development may mean building a property from scratch, including the planning and the purchasing of the land.  With an incomplete property loan of course, there is already a building in question.  It is probably in a reasonable condition, that is, not in ruins.  It is property development, but the distinction is that there is definitely already a property to develop.

Incomplete property loans are quite similar to property advancement loans also. The difference is that with property advancement it might begin with buying land and then creating a property on that land, then developing it and selling it on. Incomplete property loans are for when this initial land buying part does not have to be carried out. So essentially it is when there is already a property there and it is able to be developed. It may be missing something like a roof or an extension has to be built. The point is that there is something there to start with.


We asked some experts whether they come across applications for this type of finance often and for James Bloom, Chief Executive at Regentsmead, we were told: “Yes, we get a lot of applications for part built developments due to banks or other lenders pulling the plug on a development often without good reason. We are here to help and will always do so providing a development has been inspected by the relevant bodies and has been carried out to the required standards.”

Gavin Diamond, Finance Director at Cheval Bridging Finance, informed us: “We get a reasonable number of enquiries of this type at the moment. While we don’t provide development funding, we do consider applications for loans to complete light or heavy refurbishments or to bring the property into a mortgageable state. We also consider applications where funds are required to provide the ‘finishing touches’ to virtually completed building projects.”

Masthaven’s Richard Deacon, Sales and Marketing Director, said: “Yes, very!! With a dearth of development finance companies at the moment, brokers are looking to bridging finance companies to bridge the gap between true development and bridging finance. It can be quite a challenge for them and the client.”

We asked Lucy Barrett, Director at Vantage Finance, for a packager’s view on matters concerning properties which are part way through development. “We are seeing an increasing number of applications where clients have started a project and do not have funds to complete it.  Development funding is scarce and as a result clients are looking for more creative options such as the use of second charge bridging finance, and I would expect that most clients would go to their broker, even if it is after trying their bank first, rather than approaching more specialist lenders directly.”

We asked a few of them what percentage of their loan book covers this type of funding, with James Bloom saying “probably around 25%” and Richard Deacon stating “Quite low, less than 10%”.

James Bloom added that the biggest loan given out for this type of funding at Regentsmead is “In excess of £1 million for a part completed development of 7 houses in Essex.”

In terms of what is the maximum LTV % the lenders offer and on what term (for how many months) Richard Deacon explained: “Typically 60%, but we do insist that the property is at least wind and water tight, and ideally at first fix level. We have done many of these when it is finishing off a new build or when a conversion project has run out of money. We can go up to 12 months on this sort of project and even do drawdowns, but we do look closely at every aspect of it and see if it a viable project. There is never anything “tick box” about these deals”

Allan Kay, Director at Cheval, told us: “our refurbishment product has a rate of 60% for up to 9 months”

James Bloom explained: “We will lend up to 50% of GDV, we usually lend for 12 months,  but this is renewable”


We asked the lenders what the minimum property value their respective organisations will consider, or whether it is looked at on a case by case basis.

Richard Deacon stated: “We have no minimum property value and assess every case on its merits”

Gavin Diamond added: “Light refurbishments would be considered under our standard 1st charge product, with heavy refurbishments requiring our refurbishment product. The minimum property value that we would consider is £100K. Depending on the nature of the works to be carried out we may only consider properties with higher values.”

James Bloom informed is: “We usually need a property value of at least £250,000 but we look at everything on an individual basis.”

Tips for Brokers

Richard Deacon believes you should “get as much info up front. Many brokers come to us with a deal which simply doesn’t add up once they have quoted us current value, GDV and amount of cash required to finish. Do your own homework on the project. Does it make sense? Is it realistic, has the client had any previous experience in these sorts of deals? And ring round; many lenders change their views on these sorts of deals dependent on location, value, loan amount, client experience etc.”

Allan Kay supports this by saying: “Get as much detail upfront so that the case can be assessed properly from the outset.”

James Bloom advises: “Ensure a part built or incomplete property has been inspected by the relevant bodies (warranty provider, LA etc.). Also make sure you approach a lender who is actually lending as otherwise your client can jump from the frying pan into the fire.”

Lucy Barrett says: “There are a number of lenders who will offer finance against incomplete properties, provided they are comfortable with the overall risk presented which largely comes down to valuers’ comments.  Most bridging lenders will consider this to an extent, but more traditional development funders tend to shy away from part completed projects as a general rule.”

Incomplete bridging loans can really help to ensure that a client, or a budding property developer, doesn’t miss an opportunity of securing an incomplete or run down property, refurbishing it and then adding it to their portfolio or selling it quickly to repay the loan and also make a profit.

By Jason McGee-Abe

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