Glossary
Refinance
Replacing one loan with another, often to release cash after the value has risen.
What it means
Refinancing means taking a new mortgage to repay the existing loan. In a BRR it is the step that repays the bridge and, if the value has gone up, releases some of your cash. The new lender values the property afresh and applies its own LTV and interest cover rules, so the refinance is only as good as the valuation and the rent on the day.
Worked example
ExampleA refurbished house valued at £180,000, refinanced at 75% to repay a £90,000 bridge.
- New mortgage
- £180,000 × 75% = £135,000
- Cash released
- £135,000 − £90,000 − £1,500 costs = £43,500
If the valuation comes in at £162,000, the release falls to £30,000.
Information, not advice. Example figures are fictional and for illustration only.