Probably The Best Bridging Loan Rates In The World
Our bridging loan calculator gives a good indication of the expected rates and repayment costs when applying for a bridging loan. Apply to get the best bridging finance deal in the UK. BridgingLoans.co.uk is a Trading style of UK Property Finance.
Bridging Loan Calculator – Calculate Your Bridging Loan Repayments
Please use our bridging loan calculator to get a rough idea of the total cost of a bridging loan.
In bridging finance, monthly payments are not normally required unless requested. Instead, the borrower receives the net loan amount and on repayment of that loan also repays any interest generated while the loan was outstanding.
The maximum LTV value this calculator works to is 75%. If the calculated LTV is any higher, you will need to contact the office to obtain your calculation.
At the time of writing, every conceivable effort has been taken to ensure the accuracy of the data provided. However, the calculator should be used as a guide only and cannot be considered as a formal offer of a loan or in any other manner. For a full illustration, please call 0116 4645544 or 0800 1691589.
What is a Bridging Loan?
Bridging loans are used for a short term requirement or to release money quickly. Bridging loans are usually repaid within 12 months as the rate of interest is often higher than standard high street rates thus making it too expensive to borrow long term.
Developers & investors have been using bridging loans for many years 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.
A very common use of a bridging loan is when investors are looking to purchase at auction. You are normally required to fully fund an auction purchase within 28 days of a successful bid. Failure to pay in the given time frame may mean that you lose all or part of the 10% deposit placed on the property when your bid was accepted. Bridging loans can be pre-approved ensuring that you can bid with confidence and without worry of losing your deposit.
Shortlisted As Best Bridging Loans Broker 2017
We are proud to be shortlisted as the best bridging finance broker in the UK. UK Property Finance is a fully independent, FCA regulated organisation. Committed to quality, transparency and comprehensively objective advice above all else. The UK bridging loans market is growing at its fastest-ever pace right now, which further emphasises the significance of our nomination for such a prestigious award.
Understand Our Bridging Loan Rates
When considering a bridging loan, which is a short term loan until a longer solution is available, the key aspect to consider is its viability. The most likely indicator of whether this finance would be viable would depend on the bridging loan rates available at the time. Bridging loan rates could be influenced by the Bank of England base rate and depending on circumstances can vary between 0.37% and 1.5% per month.
A bridging loan typically runs from 0 – 12 months, and in 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
|Interest Rate||Monthly Interest|
Bridging Loan Arrangements
Our standard LTV-based interest rates are as follows:
|LTV Value||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 in order 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.
|Amount Borrowed||Arrangement Fee|
|£75,000 to £150,000||2%|
|£150,000 to £750,000||1%|
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 above have no exit fees, no default interest rates, no penalty fees and no early redemption charges.
Short Term Borrowing Plan
If you are looking to borrow up to 60% LTV over a 24-month repayment period then 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 consider 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 for loan products that are repaid in 12 month period.
Bridging Loan Costs Explained
Several factors affect the cost of borrowing when applying for bridging loan products. First and foremost is the bridging loan interest rate, which is typically expressed as monthly percentage. Bridging loan interest rates are primarily influenced by the amount borrowed and are LTV based.
You should always remember that bridging loans are only intended as a short-term borrowing option as the interest rates can be quite high in comparison to long-term products.
Other costs to consider when applying for bridging finance are as follows:
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 lenders 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 lenders 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 then 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
Choosing The Right Bridging Loan
The bridging loan rate is the monthly or daily interest charged while the loan is outstanding i.e. before it is repaid. The rate can be determined by many factors such as whether the bridging loan is closed (guaranteed exit route for repayment of the loan) or open (less firm exit). Other aspects could be the size of the loan compared with the value of the property (this is known as Loan to Value or LTV), the type of security (residential property is currently a safer bet than commercial), whether the applicant has perfect credit, etc.
A common use for bridging finance is when an ideal property is put on the market for sale, but a client has yet to receive the money from the sale of their existing property. In this instance, a closed bridging loan is when the current property is on the market, sold and exchanged but has yet to complete. This loan will be looked at as a low risk for the lender as they will be confident of being repaid in the agreed time frame. If the existing property is yet to sell, this will be deemed as an open bridging loan. This bridging loan is viewed as a higher risk of guaranteed payment in the agreed time frame and as such may demand a higher interest rate from the lender.
Why Use A Bridging Loan Calculator?
Bridging finance is a niche form of lending which is much less common and far less understood than more traditional types of funding such as mortgage finance. We have found that many of our customers who are looking at bridging finance in the initial stages do not want physical or verbal contact and instead they want all the information and data on hand.
If you think that you may potentially need a bridging loan but are unaware of how bridging loans work, you can try different values through our specially created calculator to determine the terms and schedule of your loan repayment until you find a value that fits your budget.
Once you have found a bridging loan amount that you would like to apply for, you can get in touch with one of our financial advisors who will discuss your loan application further. Our team are available from 9 – 9 throughout the week which can be contacted via email or telephone.
Our Bridging Loan Reviews
We have received many positive reviews from happy customers who have applied for our bridging loans.
“I got the bridge loan quickly (just in time for development to start) a BIG thank you to Shiwani for all her help getting me a good rate and a fast turnaround. Professional friendly service – thanks.”
“Thanks Kirstie for all your help getting me the right type of loan and I am pleased with the rate provided and the easy as which the application was done – very efficient and professional, – a great team!”
“A quick thanks you to Sean for enabling me to understand what the various options were to get the finance I wanted. I got a lot better rate for my loan than expected. Honest and helpful – thanks again.”
Bridging Loan Lender Comparison
Our integral relationship with popular bridging loan lenders helps us compare the various rates available and aim to deliver the very best bridging loans for our customers.
Frequently Asked Questions
What is the interest rate on a bridge loan?
Bridging loans differ from most other borrowing products in that the interest rate is nearly always charged on a monthly basis as opposed to annually. Although the standard interest on these products is typically set between 1% and 1.5% per month, better (and worse) deals are available depending on your provider. For this reason, it always pays to do a little research beforehand or to use the services of an FCA regulated broker who will get you the best deal available based on your individual borrowing requirements and personal circumstances.
What is the meaning of bridge finance?
Bridging finance is a short-term borrowing product that is quick to arrange and easily securable against any property type. Whereas most remortgaging products and second charge loans take weeks or months to organise, bridging finance can be approved within a matter of hours – with the funds being released in just five to seven days. Traditionally used to bridge the gap between one property transaction and the next, bridging loans can now be used for any purpose the borrower sees fit. Common uses for this type of borrowing product include the funding of swift property purchases, the payment of urgent tax bills and the financing of new build property developments, renovation work and refurbishments.
What is bridge capital?
Bridging capital is money raised against property assets that are usually provided in order to solve a short-term cash flow crisis. Whether you are a property developer in need of urgent finance in order to complete a new build or refurbishment project, or a business owner in search of a much needed financial injection that will solve a cash-flow crisis, bridging finance is a readily available source of income that offers competitive borrowing rates and a swift injection of funds.
What is a bridge loan for real estate?
A bridge loan for real estate is a useful borrowing product that can be used for any type of property financing transaction imaginable. Whether you need a short-term, secured borrowing product in order to purchase a property at auction, or you are looking for a reliable source of finance that will enable you to acquire a new place of residence whilst awaiting the outcome of the sale of your existing home, a bridge loan for real estate can help.
What is auction finance?
If you are buying property at auction and you have insufficient funds available to secure the deal then a bridging loan for auction finance can solve all of your immediate cash flow problems at once. With quickly released funds available for periods from 1 to 24 months, bridging loans are the perfect solution for anyone who needs to move quickly in order to cover the costs of buying an auction property before any rival competitor makes a successful bid that upstages them.
What is an end financing loan?
Unlike a bridge loan, which is a short-term borrowing product that is designed to solve a temporary cash flow problem, an end financing loan serves as a long-term form of credit. End financing is typically used to settle a short-term debt and these particular loans are normally used as an exit strategy for their short-term counterparts. However, unlike most other types of finance, end finance is seldom provided as an interest-free type of borrowing product – meaning the interest on funds borrowed plus the actual capital itself are repayable at the end of the loan term.
What is a swing loan?
In essence, a swing loan is exactly the same thing as a bridging loan. Just as a short-term bridge loan can help solve all manner of intermediary property purchasing problems, so too can swing finance. However, a swing loan is slightly different from a normal bridging loan in so far as the funds borrowed are usually secured against the equity in the property you currently own and the collateral tied in with the property you are about to purchase.
If you are looking to apply for bridging finance, or some other secured borrowing product, yet you have insufficient equity in your home or some other property you are using as collateral, then you will need to provide additional security in the form of some other property asset(s) that you own or have mortgaged. Additional security is always required when you need to borrow a large sum of money that exceeds the LTV rate offered by your provider.
An asset is something that you own that can also be used for security when applying for finance. Examples of assets include items of machinery, vehicles, building materials, antique furniture and even brand names. Anything of monetary value that can be sold should you default on the repayment of your loan.
A charge is what gives the lender the right to sell your property should you default on a credit agreement and find yourself unable to reach a suitable repayment program with your finance provider. If you have acquired property through a mortgage, then your mortgage provider will typically have the first charge over your home. Any additional secured products taken out against your home or some other property that you own will often be referred to as a second or third- charge borrowing product.
Closed Bridging Loans
Closed bridging loans are short-term borrowing products that are designed for borrowers with a clear exit strategy. If you only require finance for a short period, and you are simply waiting for funds to be released to repay the loan while being 100% certain that those funds will become available to you then you will typically require closed bridging finance to solve your cash flow problems.
With bridging loans, the actual amount of interest you are expected to repay is typically calculated on a daily basis, once the first month has elapsed. The advantage of this is that if the borrower repays the loan amount early, the amount of interest repayable will only by for X amount of days, as opposed to a full month worth of interest.
Similar to bridging finance, development finance is a short term loan type that is available between one and three years. Development finance is specifically intended to assist with the funding of property development projects, and it differs from other types of finance in that the funds are usually made available in stages of completion. This is possible because property development projects always increase in value as the project itself progresses from one stage to the next. Therefore, the lender can release more and more funds, safe in the knowledge that their investment is protected should the borrower default.
Whereas a mortgage or secured loan will usually require monthly repayments, a bridging loan does not. Instead, the lender expects the borrower to have a viable exit strategy whereby the entire loan amount, plus any accrued interest and additional fees, are rolled up and paid can be paid at once – usually by an agreed date. This is known an exit route, and common examples include refinancing a property or property sale.
FCA Regulated Bridging Loan
The FCA, or Financial Conduct Authority, is an independent body that has been put into place to protect consumers from irresponsible lenders. If a borrower required bridging finance secured against a property they live in or a property inhabited by a family member, then an FCA regulated product is usually required.
The FCA is always concerned that:
* Consumers get a fair deal and are made aware of the best available options concerning their interests.
* Lenders regulated by them should always strive to operate with integrity and responsibility.
It is important to realise that not all firms operate under the guidelines set down by the FCA – so, you should always exercise due diligence and do a little research before dealing with a new finance provider.
Bridging loans are not paid back in regular instalments. Instead, finance is provided for a fixed period and the interest generated is added to the total repayable amount in monthly increments.
Loan To Value (LTV)
The Loan to Value, or LTV amount, is an actual percentage of the property value used as equity when taking out a secured borrowing product.
For example, if you own a property outright and that property is worth £200,000, and you are looking for a loan with a net worth of £50,000, then that loan product will have an LTV of 25%. Most bridging loan providers will consider LTVs of up to 80% of the equity tied up in property used as collateral. However, LTVs of up to 100% is possible, provided a borrower can offer additional security in the form of extra property assets.
Net Bridging Loan
When bridging lenders talk about the Net Bridging Loan, they are speaking specifically about the net worth of the loan, before any additional costs or arrangement fees are added.
For example, if a client is looking to borrow £100,000, and the lender’s fee, assessment charges and 12-month interest costs increase the outstanding balance of the loan to £110,000, the Net Bridging Loan amount is still £100,000.
Open Bridging Loans
If a borrower cannot provide a guaranteed exit route, then the type of finance offered is referred to as an open bridging loan. This type of finance is useful when a property owner needs to raise funds to finance the purchase of a new home before a buyer is found who is interested in the applicant’s original property.
Second or Additional Charge Bridging Loans
If you are looking to secure finance against a mortgaged property and you already have an excellent deal on that mortgage, or you have a mortgage that has large exit fee penalties that you would do better to avoid, then a second or additional charge bridging loan will typically be in your best interests.
2nd charge bridging loans automatically rank lower down in the chain in comparison to 1st charge loans, which effectively means that if the property is repossessed in any set of circumstances, the proceeds from the sale will primarily be allocated towards settling the debt owed to the original lender.
Once the first lender has been recompensed, the second charge lender will be compensated, and so on. If you are applying for a second charge borrowing product, permission will always be required from the 1st charge provider.
When you apply for a bridging loan or any other secured borrowing product, you will need to provide some kind of insurance that the lender will get their money back should you default on repayments. This is known as security – and it could be the equity tied up in a residential property or the collateral held in some commercial real estate that you own.
In essence, the term of a loan is nothing more than the expected repayment period or loan duration. If you need to borrow secured funds for a 12-month term, then the loan can be repaid any time before those 12 months have elapsed – and typically without penalty. In this situation, the interest will only be repayable for the length of time that the money has been borrowed and not the full year.