The refinance, step by step.

Every value-add deal lives or dies at the refinance — it’s the moment the paper uplift becomes actual money. Here’s the sequence, and where deals wobble.

1. Time the application

Start the remortgage before the works finish — applications take weeks, and every extra month on the bridge costs interest. Be aware of the six-month rule: many lenders won’t remortgage within six months of purchase, or will cap the figure at what you paid. Specialist lenders will work from the new value sooner where there’s clear evidence of the works — your broker’s job is matching you to one.

2. Win the valuation

The valuer decides your cash-out, so make their job easy: a schedule of works with costs, before/after photos, the new tenancy agreements, and comparable evidence supporting the end value. On a title split ask for block and aggregate figures in writing; on an HMO, the licence and room-by-room income schedule support a commercial valuation.

3. Pass the affordability check

The lender advances the lower of LTV (typically 75%) and what the rent supports under the ICR stress test. On high-value, modest-rent properties it’s the rent that caps the loan — model this before you buy, not at week ten of the application.

4. Completion day

Your solicitor draws down the new mortgage, redeems the bridge — loan, arrangement fee and rolled interest, the figure your bridging calculator shows as “to repay on exit” — and sends you the balance. That balance is your cash out; whatever you put in beyond it is your cash left in, and your return on cash is now measured against that smaller number.

The two failure modes

The down-valuation— the valuer lands below your model and the cash-out shrinks. Defend with evidence, but model conservatively so a 5–10% miss doesn’t break the deal. The stuck bridge — the term expires before the remortgage completes. Build slack into the bridge term; extension fees are real money.