Student accommodation refinance

Lending criteria and valuation on refinance

A refinancing lender underwrites the asset much as an acquisition lender would: the proven occupancy, the rent roll, the operator covenant and the lease or nomination structure, sized so net rental income covers the new debt service with headroom. The advantage on a refinance is history: instead of projections, the lender sees how the asset has actually performed, which usually makes for a cleaner case, and an asset that has lifted occupancy or grown its rents since the last loan presents well and supports better terms. The valuation is on an investment basis, capitalising net income at a yield, with Knight Frank putting prime UK PBSA net initial yields at around 4.25 percent for 2025. On an equity release, the lender re-tests interest cover at the larger loan to confirm the income still services comfortably. We assemble the income story and the value evidence so the lender sees the asset at its best, and we check the maths on any early repayment charge before recommending a move.

Loan to value and what you can release

Refinance loans are sized like investment loans, indicatively up to 65 to 70 percent of value on an investment basis, and usually constrained by interest cover on the net rental income rather than by loan to value alone. The opportunity on a refinance comes from change since the last loan: if the asset is now worth more, or produces more income, the same asset supports a larger facility, and the difference between the new loan and the redeemed debt is the equity you can release, net of fees and any early repayment charge. Sector trends help here, with Cushman & Wakefield recording around 7 percent rental growth for 2024/25. On an equity release, the lender re-tests affordability at the higher loan, so the achievable figure depends on both the value and the income. We model the redemption, the new loan and the net cash released before you commit, so the numbers are clear from the start. All bands are illustrative, subject to principal sign-off and not an offer.

Refinancing development or bridging debt onto a term loan

Refinance pricing tracks the investment-debt market, a margin over SONIA or base, or a fixed rate, set by the leverage, the covenant, the city and the term, with the keenest pricing on prime stabilised assets. The costs of moving include a new lender arrangement fee of around 1 to 1.5 percent, an investment valuation, legal fees, and crucially any early repayment charge on the existing facility, which can outweigh the saving if the current deal is recent. The clearest win is exiting short-term debt: moving a scheme off bridging, priced per month, or off development finance, priced for construction risk, onto a long-term investment loan cuts the cost sharply, which is exactly why this exit is planned from the day the short-term facility is taken out. We compare the all-in cost of refinancing against the cost of staying put, disclose our broker fee in writing, and never claim an exclusive tie to any lender.

Refinance, a new investment loan or staying put

Refinance is the right product when you already own the asset and want to improve the debt: release equity, exit short-term money, reprice, or consolidate a portfolio. It shares its underwriting with an investment term loan, because a refinance simply puts a new investment facility in place of the old debt; the difference is that an acquisition loan funds buying an asset you do not yet own. Sometimes the right answer is to stay put, when the current margin is keen and an early repayment charge would swallow the saving, and we will tell you when that is the case. Exiting development or bridging debt is the clearest win, because moving from construction-priced or monthly money onto a long-term investment loan cuts the cost sharply, and lining that exit up early is exactly what a good development or bridging plan should include. We weigh moving against staying on the full numbers.