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Bridging Loan Calculator
Our bridging loan calculator gives a good indication of the expected rates and repayment costs.
When using our calculator, we will not perform credit checks, nor will we pass your information to any third party. We are committed to protecting your personal data and are registered with the Information Commissioner Office (ZA115985).
Why use a bridging loan calculator?
Our bridge loan calculator is designed to give you an exact assessment of all the costs connected to obtaining bridging loans.
We’ve designed our bridging loan calculator with borrowers in mind, offering a practical estimate of the complete expenses associated with bridging finance before you make your application. If you need any guidance on how to use the calculator effectively, simply give us a call and our committed team members will gladly assist you.
How to use our calculator
What information do we require?
Just provide your individual details in the relevant sections and let the bridging calculator take care of the rest of the work for you.
You’ll need the following information:
- Type: options include standard, refurbishment, or a second charge loan.
- Term: how long would you like the loan term to be? Usually, up to 12 months is standard.
- Properties: The number of properties you have to offer for security.
- Valuation: of the property or properties offered for security.
- Loan Amount: Input the amount of funding you think you will need.
Once you have input your details, we will calculate all the costs attached to apply for and take out bridging finance. If you use our calculator, rest assured that your credit rating will not undergo scrutiny, and none of the data you provide will be disclosed to external entities. By employing our calculator to assess your expenses, you can gain prior knowledge of any charges or fees associated with acquiring bridging finance.
Our bespoke calculator will highlight all fees and charges typically included in the overall cost.
After using the calculator to confirm the loan amount, we will be in touch using the contact details provided, or you can call one of our financial advisors for advice to discuss your application further.
How much does a typical bridging loan cost?
Bridging loans are intended to be short-term loans and have a larger risk than standard mortgages; their interest rates are often higher, with the rate being based on your current circumstances.
How are bridging loan costs calculated?
There should be various factors that you will need to take into account:
- LTV, short for loan-to-value: represents the proportion between the amount borrowed and the true value of the property put forward as collateral. Typically, as a practical guideline, the greater the LTV, the greater the interest rate that will be presented, and conversely. Put simply, if LTV is low, borrowers can expect favourable interest rates from most lenders.
- Regulated vs. unregulated: If the property is intended to be lived in by the buyer, then the loan will fall under FCA regulations and therefore be considered regulated. For property purchases that are for investment purposes only, they will be considered unregulated.
- The size of the deposit: This plays a significant role in shaping how lenders perceive your financial reliability. By making a large deposit, you position yourself as a less risky borrower, boosting your chances of obtaining a bridging loan with a lower interest rate.
- Lender fees: These are fees charged by the bridging loan lender for arranging the loan and are typically around 2% of the loan amount; however, this may vary slightly from lender to lender.
- Legal fees: Completing legal paperwork is necessary for a bridging loan, just like it is for a regular mortgage. You will have to take on the responsibility of finding a solicitor who can handle all the legal complexities involved in bridging finance. In addition, you will be responsible for covering the expenses related to hiring a solicitor. Borrowers could also be liable for their own expenses in addition to those of the lender.
- Broker fees: Most brokers will charge a fee for their services. It is always worthwhile to employ the services of a bridging broker, as they have access to the best deals and, therefore, will overall lower the total loan costs.
- Valuation costs: Bridge finance is a type of secure loan and therefore requires security (collateral), which will have to be valued to ensure that the asset is of sufficient value.
- Exit Fee: Most lenders will not impose this charge, but for lenders who do, this is usually around 1% to 2% and payable on the redemption of the bridging loan.
How is interest calculated?
The calculation of bridging finance interest differs greatly from that of typical mortgage interest. Bridging finance is calculated differently than traditional mortgage products due to the way interest is calculated. The interest on a long-term debt, such as a mortgage, is calculated annually. On the other hand, the interest on a bridging loan is fixed on a monthly basis. Typically, bridging loans are returned within 12 to 18 months. Less interest is paid by the borrower if the loan is returned ahead of schedule. In addition, a lot of lenders provide rolling-up interest, which is interest that accrues and is paid all at once at the conclusion of the loan period.
Bridging Loan Eligibility
Bridging loans cater to a specific set of borrowers seeking financial assistance for property transactions. Here’s a quick overview of who qualifies:
- Individuals, partnerships, and companies: Sole proprietors, business ventures, and even established corporations can apply.
- Property Focus: Common uses involve purchasing or renovating residential or commercial properties.
- Age Requirement: Generally, you must be 18 or older, with some lenders setting a maximum age limit.
- UK Residency: Living or having a registered address in the UK is essential.
- Secured Loan: Providing collateral, typically property, is mandatory.
- Exit Strategy is Key: A clear plan for repaying the loan, such as selling the secured asset, securing long-term financing, or receiving expected funds, is crucial.
- Minimum Loan Amount: Most lenders require a minimum loan amount, often around £10,000.
- Employment Status: Your employment status (employed, self-employed, or retired) is generally not a major factor compared to the points mentioned above.
Note: While credit history and income proof might not be the primary deciding factors, lenders may still consider them in some cases.
Bridging Loan Costs Explained
Here’s a breakdown of the potential costs associated with a bridging loan:
Administrative Fee: This one-time fee, typically around £295, covers the processing and handling of the loan application. It’s important to note that this is only payable if the loan is approved and drawn.
Valuation Fees: These fees depend on several factors:
- Property Value: Higher-value properties generally incur higher valuation costs.
- Location: Valuations in certain areas might be more expensive.
- Report Type: A detailed valuation report will cost more than a basic “desk-top appraisal.” While thorough valuations are crucial, we prioritise cost-effective options like desk-top appraisals whenever possible.
- Payment: Valuation fees must be paid directly to the surveyor or lender.
Redemption Charge: This fee covers the legal costs associated with removing the lender’s security charge from your property after you repay the loan.
Solicitor Fees: The lender will appoint a solicitor to handle legal aspects like loan contracts and securing the property. These legal fees are the responsibility of the borrower. We provide a cost estimate through our online calculator.
Transparency on Our End
There are no hidden charges! We don’t charge broker fees, and you won’t incur any exit fees with our loans.
Remember, these are additional costs on top of the loan interest rate. Carefully consider these expenses when evaluating the total cost of a bridging loan.
