Staged Drawdowns: A More Cost‑Effective Way to Fund Refurbishment Works
For property investors, strong returns depend on many factors. Location. Timing. Build costs. Market conditions. While some of these are outside an investor’s control, the way finance is structured is not.
One area that is often overlooked is when funds are actually drawn. Many borrowers still take the full value of a bridging loan on day one, even when much of that capital will not be needed until later. The result is higher interest costs, less efficient use of capital and reduced flexibility if plans change.
In a market where margins are tightening, avoiding unnecessary interest costs can make a real difference.
A smarter approach to refurbishment finance
Staged drawdown facilities provide a more considered way to fund refurbishment projects. Rather than paying interest on the full loan from the outset, borrowers only pay interest on the funds they have actually drawn.
It is a simple change in structure, but one that can improve cashflow, reduce overall borrowing costs and support stronger project returns.
How staged drawdowns work with Castle Trust Bank
At Castle Trust Bank, staged drawdowns are available across both light and heavy refurbishment bridging loans, helping investors match funding to the pace of works on site.
For larger refurbishment schemes, borrowers can access up to five drawdowns. For lighter works, such as kitchens, bathrooms or energy efficiency upgrades, funding can still be released in phases.
Interest is charged only on released funds, not the full facility. This gives investors greater control over costs and ensures finance supports the project at every stage.
Where staged drawdowns add the most value
Staged drawdowns are particularly effective for projects delivered in clear phases.
HMO conversions often involve distinct stages, from structural changes through to services and final finishes. Permitted development schemes can benefit where expenditure increases later in the programme. Buy-refurb-refinance projects also suit phased funding, especially where improvements are carried out over several months.
Student and co-living schemes are another strong example of how staged drawdowns add value, with refurbishment often planned around academic calendars. Energy efficiency upgrades can also be funded more efficiently when works are scheduled over time.
For investors managing multiple sites, staged drawdowns can help preserve liquidity across a wider portfolio, releasing funds only when they are needed.
Reducing costs and protecting cashflow
The benefit of staged drawdowns becomes clear when comparing two otherwise similar projects.
Take a six-month refurbishment with a total works budget of £500,000 at a monthly interest rate of 0.75%. Drawing the full amount on day one means paying interest on the entire sum for the full term.
By contrast, drawing £300,000 initially and the remaining £200,000 halfway through the project reduces the interest charged in the early months and can cut the total interest bill by several thousand pounds.
Those savings can then be reinvested back into the scheme, supporting higher-quality finishes, EPC improvements, contingency planning or marketing ahead of letting or refinance.
Supporting brokers and investors with structured funding
For brokers, staged drawdowns are an effective opportunity to add real value. They allow finance to be structured around how a refurbishment programme actually runs, rather than defaulting to a single upfront advance.
For investors, the advantages are clear. Lower borrowing costs. Improved cashflow. Greater flexibility. More control over project delivery.
At Castle Trust Bank, our refurbishment bridging solutions are designed to support property investors at every stage, with funding structures that reflect the realities of modern refurbishment projects.
Staged drawdowns may not suit every deal, but in the right scenarios they offer a smarter, more cost-effective way to finance refurbishment works and maximise returns.
