Quick answer
Property refurbishment finance funds the purchase of a tired property and the cost of renovating it, usually as a short-term loan with staged drawdowns for the works. The exit is typically a sale or refinance once the work is done. Ownright Custom Finance arranges refurbishment finance Australia-wide for residential and commercial projects.
Key points
- Can fund the purchase, the works or both
- Works funds are often released in stages as the job progresses
- Lenders focus on the plan, the numbers and the exit
- Suits flips, hold-and-refinance projects and commercial repositioning
- Suits
- Investors, developers, builders and owners improving property
- Security
- The property being refurbished, sometimes extra security
- Term
- Short term, often with a sale or refinance exit
- Australia-wide
- Yes
What is property refurbishment finance?
Property refurbishment finance is short-term funding used to buy a property that needs work and pay for the improvements. The goal is to lift the property’s value or income by upgrading it, then either sell at the end (a flip) or refinance and hold. It covers anything from a cosmetic refresh of a house to repositioning a tired commercial building.
Because the property is worth more after the work than before, lenders look at two values: the as-is value today and the expected value on completion. The loan is built around both.
Who uses refurbishment finance?
- Investors buying run-down houses and units to renovate and sell
- Owners upgrading a rental or commercial building to raise income
- Builders and tradespeople doing their own projects
- Landlords repositioning a retail, office or industrial property
- Buyers purchasing at auction who need to fund works soon after
If you are renovating the home you live in, our renovation loans page is the closer match.
How does the funding usually work?
- A lender funds a portion of the purchase against the as-is value.
- Works funds are set aside, often tied to a budget and builder quotes.
- Funds are released in stages as the work progresses, subject to checks.
- The property is sold or refinanced at the end, repaying the loan.
Interest may be paid monthly or, with some lenders, added to the loan so there are fewer cash demands during the project. Our guide on how loan drawdowns work explains the stages in more detail.
What do lenders look at?
The property and plan. The as-is value, the proposed works and the end value. Photos, plans and quotes show you have a realistic scope.
The numbers. Purchase price, total works budget, contingency, holding costs and likely sale price. A project with thin margins gets more scrutiny.
The team. Builder licences, fixed-price contracts, insurance and experience matter. Lenders want to know who is doing the work.
Approvals. Planning permits, council approvals and heritage constraints, if relevant. For more complex projects, see development finance.
The exit. A realistic path to repayment, whether sale, refinance or both. Our guide on bridging loan exit strategies covers common approaches.
You. Credit, experience, other assets and your contribution to the project.
Refurbishment, bridging and development finance compared
| Feature | Refurbishment finance | Bridging finance | Development finance |
|---|---|---|---|
| Main purpose | Buy and improve | Cover a timing gap | Build or subdivide |
| Typical term | Short | Short | Project-length |
| Works funding | Staged, for renovation | Usually none | Staged, larger scale |
| Exit | Sale or refinance | Sale or refinance | Sale of lots or refinance |
See commercial bridging loans and bridging finance for the timing-gap side, and subdivision finance if the plan involves splitting land.
What are the common risks?
- Works costing more or taking longer than planned
- The completed value falling short of the forecast
- Holding costs eating the margin
- Approvals delaying the start
- Market conditions changing before you sell
A sensible contingency and a conservative sale price give you breathing room. Lenders appreciate a plan that still works if the numbers move.
How Ownright approaches refurbishment projects
Trevor Scott’s team has been structuring tricky property deals for a long time. We like projects that need a bit of thought, such as an auction purchase with a short settlement, a property the banks will not touch because of its condition, or a commercial building that needs repositioning. We test the plan with you first, then approach lenders likely to fund it.
If you are working with a partner, a joint venture property finance structure may fit. We work Australia-wide from our Knoxfield, Victoria head office.
An illustration
Illustrative scenario only. An investor buys a dated brick unit block at auction, planning to modernise the kitchens and bathrooms and lift the rents. A broker could arrange funding for the purchase, tie works funds to the builder’s quote with staged releases, and plan a refinance onto a longer-term loan once the upgraded rents are in place.
Mistakes to avoid
- Underestimating the budget and skipping a contingency
- Starting works before approvals are sorted
- Relying on a single exit with no backup
- Ignoring holding costs such as rates, insurance and interest
- Choosing a lender before understanding how drawdowns work
Documents to have ready
- Contract of sale or purchase details
- Scope of works, plans and builder quotes
- Evidence of your own contribution
- Asset and liability summary
- Photo ID and entity details
The guide on what documents you need and our loan-ready checklist help you pull it together. For wider options, see the commercial loans hub.
How much of the cost might a lender fund?
It varies with the lender, the property, your experience and the strength of the plan. Lenders typically apply limits to the purchase and to the works, and they may base figures on the as-is value, the completed value or both. We do not guess numbers; we ask what you are buying, what you plan to do and what you can contribute, and then check what lenders are likely to offer. Cash contributions, additional security and a fixed-price builder contract can all improve the picture.
Can interest be capitalised during the works?
Some lenders allow interest to be added to the loan during the project so you are not meeting monthly payments while there is no rent or sale income. That lowers the pressure on cash flow but increases the amount owing at the end, so the margin in the project needs to cover it. Our capitalised interest explained guide breaks this down.
What if the project runs late?
Delays are common, so ask what happens if the loan term ends before the work or sale does. Extensions may be possible but can cost more, and not every lender will agree. A realistic timeline, a contingency and a lender comfortable with an extension protect you. If a short-term loan does need rolling into a longer-term arrangement, our commercial loan refinance page shows the options.
Ready to fund your refurbishment?
Sounds like you’re looking for property refurbishment finance that covers the buy and the build. We’re the lending experts in getting renovation projects funded, so click the button below and see if you qualify.
How it works, step by step
- 1
Step 1
Send the property details, scope of works, budget and expected end value.
- 2
Step 2
We test the plan, the numbers and the exit with you before approaching lenders.
- 3
Step 3
We present to lenders that fund refurbishment and agree on drawdown stages.
- 4
Step 4
Funds settle, works progress is checked and draws are released as agreed.
Frequently asked questions
Can I borrow for both the purchase and the renovation?
Often yes, although how much depends on the lender, the property and your experience. The purchase is usually funded at settlement and the works funds are released in stages as the job progresses. Lenders look at the as-is value, the scope of works and the expected value on completion.
How are refurbishment funds released?
Commonly in stages, with the lender checking progress before each release, sometimes through an inspection or a quantity surveyor. Some smaller projects may allow a single drawdown. Our guide on loan drawdowns explains the difference, and we confirm the process before you commit.
Do I need building approvals before applying?
For anything beyond cosmetic work, lenders typically want to see that necessary council approvals, permits or plans are in place or well progressed. Cosmetic refurbishments may not need them. Tell us the scope early and we will say what the lender is likely to ask for.
What is a refurbishment exit strategy?
It is how the loan gets repaid, most often by selling the property or refinancing it onto a longer-term loan after the work is done. Lenders want a realistic plan and a backup. A project that relies on a single, optimistic sale price is riskier than one with options.
Can I get refurbishment finance without experience?
Sometimes, but experience helps. First-timers may be asked for a larger contribution, a strong builder with a fixed-price contract, or extra security. We look at how to present a first project credibly, with the right team and realistic numbers.
Is refurbishment finance different from a renovation loan?
They overlap. Renovation loans are often aimed at owner-occupiers improving the home they live in. Refurbishment finance leans towards investors and commercial projects, with shorter terms and an exit plan. We help work out which is the better match for your goal.