Why Use A Bridging Loan Calculator?
Bridging finance is an alternative form of lending to traditional mortgage finance that’s been gaining a lot of traction over recent years. We understand that for many customers simply exploring their options, in-person meetings and consultations aren’t always convenient.
If you think that you may potentially benefit from a bridging loan but are unaware of how they work, we’re here to help. We’re proud to offer a simplified yet dynamic bridging loans calculator, which can be used to help determine the terms and repayment schedule of your ideal loan with a quick and easy online quote.
Once you’ve decided on the loan amount you’d like to apply for, you can get in touch with one of our financial advisors for advice and to discuss your application further.
Our team is available from 9am to 9pm throughout the week and can be contacted via live chat, email or telephone.
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What is a Bridging Loan?
Bridging loans are used for short-term financing requirements, or when money in larger sums is needed quickly. Bridging loans are usually repaid within 12 months as the annuals rate of interest is typically higher than standard high street rates – thus making bridging finance unsuitable for long-term loans.
Developers and investors have been using bridging loans for many years now, allowing them to take advantage of market conditions or undervalued investment opportunities. Being able to purchase a property quickly offers numerous advantages to the purchaser, such as negotiating the best price and beating competitors to the deal.
Other instances where bridging loans can be of unique value include:
- When buying a house without finalising your own house sale
- While building a home to be sold upon completion
- When looking to cover unexpected business expenses
- While waiting for pension payments in lump sums
- While establishing a new start-up from scratch
- When looking to redevelop or refurbish real estate
No Credit Check, No Income
Bridging finance can be great for borrowers who may have problems with poor credit, or perhaps are without proof of income – including the unemployed. Just as long as the required security can be provided, bridging loans represent ideal commercial and residential solutions alike.
While terms and conditions vary significantly in accordance with the lender and the borrower’s requirements, bridging loans can represent a real lifeline vs mortgage options that may be inaccessible. Eligibility is determined on a case by case basis, with bad credit having little or no influence.
The Purpose of Bridging Loans
An example of a popular and effective use of a bridging loan is when investors are looking to buy at auction. Successful bidders being required to fully fund an auction purchase within 28 days. Failure to pay within the given timeframe may mean losing all or part of the 10% deposit placed on the property when the bid was accepted, along with their inability to buy property for a highly competitive price.
As bridging loans can be pre-approved, buyers can bid with confidence and with no deposit loss to worry about.
Use our bridging loans calculator today for a quick and easy estimate on the approximate costs for your ideal loan.
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Understand Our Bridging Loan Rates
When considering a bridging loan – effectively a short-term loan until a more permanent solution is available – the key aspect to consider is its viability. The most likely indicator of whether this type of finance is viable depends on the bridging loan rates available at the time. Bridging loan rates can be influenced by the Bank of England base rate and, depending on the circumstances, can vary between 0.37% and 1.5% per month.
A bridging loan typically runs from 0 – 12 months, though certain circumstances can be extended longer.
Typical bridging loan criteria are as follows:
- 0.37% – 1.5% monthly interest rate
- 75% Loan to Value (LTV) – This can increase to over 100% with additional security
- Arrangement fee of 1 – 2%
- No exit fee (on certain products)
- No minimum term i.e. loans can be repaid after a day
The table below resembles a typical loan repayment on £100, 000
The table below resembles a typical loan repayment rate of 0.37%, over a 12 month term
|Bridging Loan Amount
||Repayment Amount (excl. broker fees etc)
Bridging Loan Arrangements
Our standard LTV-based interest rates are as follows:
||Interest Per Month
|LTV up to 50%
||0.49% per month
|LTV from 50% to 65%
||0.64% per month
|LTV from 65% to 70%
||0.84% per month
|LTV from 70% to 75%
||0.94% per month
We typically use the OMV (Open Market Value) of a property to calculate the LTV amount. However, OMV figures do tend to be slightly higher than forced sale or 90-day valuations.
Lenders Facility Fee / Arrangement Fee
Although we often charge lower rates, a standard lenders fee of 2% is usually applied when arranging bridging loan finance. We base this on the gross amount borrowed.
|£75,000 to £150,000
|£150,000 to £750,000
When calculating the arrangement fee using the figures provided above, it is important to consider that the minimum loan duration is 30 days. If you repay the loan before this period has elapsed, you will still be charged 30 days full interest. Once this period has passed, we will only expect you to pay interest up to and including the date that you have completed the full repayment.
The products outlined in the guide above have no exit fees, no default interest rates, no penalty fees and no early redemption charges. Lenders may also offer certain deals with no arrangement fee whatsoever, depending on the size of the loan and the borrower’s circumstances.
Short Term Borrowing Plan
If you are looking to borrow up to 60% LTV over a 24-month repayment period, why not consider our short-term loan plan?
Our short-term property financing options have the following advantages:
- Borrow up to 60% LTV over 2 years
- Fixed arrangement fee of 2%
- Interest paid monthly or at the end of the loan term
It is important to note that our short-term borrowing plan typically takes longer to set up than a standard bridging loan and that the fees are somewhat higher than 12-month loan products.
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Bridging Loan Costs Explanation
Several factors affect the cost of borrowing when applying for bridging loan products. One of which being the interest rate, which is typically expressed as monthly percentage. Interest rates are primarily influenced by the amount borrowed and are LTV based.
It’s important to remember that bridging loans are only intended as a short-term borrowing option, as interest rates can be quite high in comparison to long-term products.
Other costs to consider when applying for bridging finance are:
Most bridging finance brokers charge a fee for their services.
Some, but not all, lenders charge an exit fee – which they add to the loan amount when you make the final repayment. With UK Property Finance, there are no exit charges to pay.
When applying for bridging finance, there is usually a lender’s fee involved – ranging from 0% to 2%, depending on the amount borrowed. This is included in the loan costs.
As well as paying your own solicitor’s costs, you will usually be expected to pay the lender’s costs in exchange for them setting up the bridging loan. Legal fees can vary greatly from one lender to the next.
Interest Roll Up
Although most interest charges are paid monthly on a bridging loan, many lenders offer the option to ‘roll up’ the interest, which means that the interest is charged in full at the end of the loan term.
If you are unable to provide an adequate surveyors report, a property valuation will need to be carried out before the loan application is completed. In most instances, you will be expected to pay for this upfront. The money is usually paid directly to the surveyor undertaking the valuation.
Most bridging loan lenders will offer a concessionary rate of interest that is applicable provided you stay within the repayment terms. If you make your payments on time and stay within the agreed repayment period, you will usually be given a lower interest rate as an incentive. However, if you stray outside the agreed repayment period or you miss a payment, you will often be liable to pay a higher rate of interest.
Additional Factors That Influence Bridging Loan Interest Rates
Although the fees and rates charged vary considerably from lender to lender, several factors will influence the amount you will be able to borrow and the interest rates you will be charged when applying for bridging finance.
These are as follows:
- The Loan to Value amount
- The type of property offered as security
- The condition and location of the property
- The type of legal charge you have on the property
- Your monthly income and ability to make the repayments
- Your credit history
- The duration of the loan
- The cost of lending and affordability of the loan from the lender’s viewpoint
How Does It Work?
We can help make the application process as quick and easy as possible – regardless of your current position or requirements. We can also help introduce you to the important pros and cons of a variety of alternative financial solutions. Simply get in touch with our customer service team and we’ll guide you through the process from start to finish.
How Much Can I Borrow?
The amount you can borrow will depend on your current circumstances and how much security/collateral you are able to put up. Most lenders and banks that offer bridging finance secure the loans against property. So the greater the value of the property or properties you own, the more you’ll be able to borrow.
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Bridging Loan Comparison
Our bridging loan partners help us deliver the best property bridging loans for our customers allowing UK Property Finance to provide the best bridging loan rates in the UK.
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