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0.55% Low Bridging Loan Rates
When considering applying for a bridging loan, the key aspect to consider is its viability. The most likely indicator of whether bridging finance is viable depends on the best bridging loan rates available at the time.
The rates for bridging loans can be swayed by the Bank of England’s base rate and may fluctuate between 0.55% and 1.5% per month, depending on the prevailing market conditions. Usually, a bridging loan ranges from 0 to 12 months, although there are times when the loan duration can be prolonged, given specific circumstances.
Typical bridging loan criteria are as follows:
- 0.55%–1.5% monthly interest rate.
- Arrangement fee of 1–2%.
- No exit fee (on certain products).
- Unlike a mortgage, there is no minimum term i.e., loans can be repaid after a day, for example.
- 75% Loan to Value (LTV) – it is possible to increase to over a 100% LTV bridging loan with additional security.
The table below resembles a typical £100,000 bridging loan
| Interest Rate | Monthly Interest |
|---|---|
| Rates from 0.55% | £550 |
| Rates from 0.70% | £700 |
| Rates from 0.75% | £750 |
| Rates from 0.85% | £850 |
| Rates from 0.95% | £950 |
| Rates from 1.00% | £1,000 |
| Rates from 1.05% | £1,050 |
| Rates from 1.10% | £1,100 |
| Rates from 1.20% | £1,200 |
| Rates from 1.25% | £1,250 |
| Rates from 1.50% | £1,500 |
Typical bridging loan repayment cost (based on a rate of 0.55%) over 12 months
| Bridging Loan Amount | Repayment Amount (excluding broker fees etc) |
|---|---|
| £50,000 | £59,254 |
| £60,000 | £70,148 |
| £70,000 | £81,042 |
| £80,000 | £91,936 |
| £90,000 | £102,829 |
| £100,000 | £113,723 |
| £110,000 | £124,836 |
| £120,000 | £135,948 |
| £130,000 | £147,060 |
| £140,000 | £158,172 |
Bridging loan arrangements
Our standard bridging loan LTV interest rates are:
| LTV Value | Interest Per Month |
|---|---|
| LTV up to 50% | Rates from 0.55% per month |
| LTV from 50% to 65% | Rates from 0.60% per month |
| LTV from 65% to 70% | Rates from 0.70% per month |
| LTV from 70% to 75% | Rates from 0.70% per month |
We typically use the open market value of a property to determine the bridging loan LTV amount. However, these figures tend to be slightly higher than forced sales or 90-day valuations.
Lender facility fee or arrangement fee
Although we often charge lower rates, a standard lender fee of 2% is usually applied when arranging bridging loan financing. We base this on the gross amount borrowed.
| Amount Borrowed | Arrangement Fee |
|---|---|
| £75,000 to £150,000 | 2% |
| £150,000 to £750,000 | 2% |
| Over £750,000 | 2% |
When you’re working out the arrangement fee for a bridging loan based on the given numbers, it’s crucial to keep in mind that the shortest loan duration is 30 days. Should you choose to settle the loan before this timeframe, you’ll still incur full interest for 30 days. Once the initial thirty-day period has elapsed, you’ll only be required to pay interest up until the date you’ve fully repaid the bridging loan.
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 bridging loan and the borrower’s circumstances which can be determined using an online bridging calculator.
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? (If you require up to 100% bridging finance, please contact us to discuss the various options.)
Our short-term bridging finance 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 your usual 12-month loans.
The cost of a bridging loan explained
Several factors affect the cost of borrowing when applying for a bridge loan, such as the interest rate, which is typically expressed as a monthly percentage. Interest rates are primarily influenced by the amount borrowed; therefore, the rate for 100% bridging loans or a lower LTV-based figure may vary.
It’s important to remember that bridging loans are intended as a short-term borrowing option due to the high interest rates in comparison to long-term loans.
Other costs to consider when applying for bridging finance are:
- Administration fees.
- Most bridging finance brokers charge a fee for their services.
- Exit fees.
Some 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.
Lenders fee
When applying for a bridge loan, there is usually a fee involved payable to the lender companies. This can range from 0% to 2%, depending on the amount borrowed. This is included in the loan costs.
Legal fees
In addition to covering the expenses of your own solicitor, it is customary to bear the responsibility of paying the lender’s costs as a quid pro quo for facilitating the loan arrangement. The charges incurred for legal services can exhibit significant discrepancies between different lenders.
Interest roll-up
Although most interest charges are paid monthly, many lenders offer the option to ‘roll up’ the interest, thus meaning that the interest is charged in full at the end of the loan term.
Valuation fees
If you are unable to provide an adequate surveyor 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.
Concessionary rates
Bridging loan lenders typically provide a concessional interest rate that applies as long as you adhere to the repayment terms. It is common to receive a reduced interest rate as a reward for timely payments. However, deviating from the agreed-upon repayment plan or failing to make any payments may result in a higher interest rate being imposed.
Additional factors that influence bridging loan interest rates
The fees and rates levied by different lenders can vary considerably, and numerous factors will influence the amount of funds attainable and the corresponding interest rates offered for bridge loan finance.
By definition, these are as follows:
- The loan-to-value amount
- The type of property offered as security – residential or commercial accepted
- 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
Bridging loan comparison
Our bridging loan partners help us compare solutions and deliver the best property bridging loans for our customers, allowing UK Property Finance to provide the best bridging loan rates in the UK. Contact us to arrange a call or to book online appointments to discuss your needs in greater detail. We are open all week.
