The ABC Finance Bridging Loan Calculator
Our simple to use bridging finance calculator is designed to work out interest costs of bridging loans quickly. On top of the interest, the calculator will also allow quick calculations of fees and loan to value (LTV).
For information on likely rates and fees read on below. Alternatively, for the most accurate results, get a free bridging loan quote by enquiring online or talking to one of our bridging loan experts. We will usually be able to provide you with full terms within 1 hour of your enquiry.
Bridging Loan Rates
Bridging loan rates vary depending on the risk of the application. There are several factors that affect the pricing of bridging loans. The main ones are the following:-
- The type of property offered as security
- Credit history of the applicants
- Loan to value
Bridging loan rates start at 0.45%, although the cheapest overall products usually start at rates of 0.55% per month. Products below 0.55% per month tend to have hefty fees attached to them, making them unattractive when the total cost is taken into account.
Rates from 0.55% to 1% are realistic for the majority of bridging loans secured against residential property. When calculating the cost of a commercial bridging loan, rates of between 0.75% and 1.25% per month are realistic.
Bridging loans can be secured against land – with or without planning permission. Where using the bridging finance calculator to work out costs for this situation, rates of between 0.9% and 1.35% per month would be most realistic.
Bridging loan interest is often ‘rolled-up’ or retained. This means that during the term of the loan, no monthly repayments are due. The interest is added to the loan by the lender and is repaid when the loan is paid off.
Retained interest can be appealing as the luxury of having no monthly interest payments to make is attractive and can ease cash flow. The key consideration is affordability – would making the repayments be affordable. If not, we recommend rolling up the interest where possible.
Where both rolled-up or serviced interest is comfortable, our expert bridging loan advisors will help you to understand the benefits of each route.
Bridging loan lenders charge an arrangement fee. Most applications are charged 2% of the loan amount. Some lenders are now starting to reduce their fee, with some going as low as 1% for a number of applications. As the work involved in completing a bridging loan is similar regardless of size, discounted fees are more common in larger loans.
In addition to the lender arrangement fee, some lenders will charge an exit fee. This fee tends to vary and will either be charged as a percentage of the loan or 1 months interest. The percentage of the loan route will usually be between 1-2% of the amount borrowed, with 1% far more common.
Bridging Finance is usually considered a short-term product. Most bridging loans are for between 1-12 months; however, there are lenders who will offer terms of up to 2 years. When calculating your bridging loan costs, a term of up to 2 years is realistic.
Generally speaking, it would not be advised to take out bridging finance for 2 years as the interest rate is higher than other property-backed lending. If possible, a shorter bridging loan term would be ideal, with a switch to a mortgage coming as soon as reasonably possible.
Loan To Value
Maximum loan to values (LTV) depends on the client profile, the quality and location of the security property and the intended exit.
The highest LTV is usually reserved for bridging loans secured against residential properties. In these circumstances, 80% LTV is usually the maximum. It is worth noting that as LTVs increase, so do interest rates due to the increased risk to the lender. Taking out a bridging loan against a residential property will usually be much cheaper at 75% LTV or below, with the lowest rates usually available up to 60% LTV.
Commercial bridging loan products will have a lower maximum loan to value. As there are so many different types of commercial property, different properties will have different maximums. As a general guide, the absolute maximum commercial bridging loan would be 70% LTV.
A bridging loan secured against land, either with or without planning permission will usually achieve a maximum 65% LTV.
Applying For A Bridging Loan
- Enquire online or call us on 01922 620008. One of our bridging loan advisors will talk through your circumstances and offer initial terms on the best bridging loan available to you.
- We will send out a decision in principle within 1 hour outlining the terms available from the best bridging loan companies including any fees and charges that may be payable. We sense check every application upfront to make sure the application will fit the lender and that completion within your required timescale is realistic.
- Your case can now be submitted to the lender. If you’re happy to proceed, we spend time ensuring you understand the product and charges. We help you to collate the information needed to submit your full application.
- We would then instruct the valuation (if one is needed on your application) and legal process as soon as the lender is happy with the information received. In cases that are less urgent, we are able to delay the legal work until you are happy with the results of the survey.
- Once this work’s done you are free to drawdown on your bridging loan and complete on your property transaction/refinance.
- To find out more about bridging loans or to get a personalised bridging loan quote, enquire online now or call us to talk to an advisor. Our team of experts will be able to assess your application quickly and provide you with full written terms.