Bridging Loan Rates & Fees
Find out the latest bridging loan rates, fees and charges and get the best deal with ABC Finance
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One of the biggest considerations when taking out a bridging loan for most borrowers is the cost of borrowing.
These costs are made up of interest, which is dictated by a combination of the loan size and interest rate, and any associated fees.
In this guide, we break down the costs of borrowing, how bridging loan interest works and what fees you can expect to pay.
Bridging loan interest rates explained
Bridging loan rates are expressed as a monthly figure, rather than annually. Here’s a breakdown of the interest costs that you can expect to face.
What are the latest bridging loan rates?
Residential bridging finance rates start from 0.39% per month. Most loans will sit between 0.55-0.85% per month.
There is a greater degree of difference in the rate charged on each loan than other types of property finance, with many lenders pricing loans individually based on the security offered and loan to value required.
Commercial bridging loan lenders tend to price each loan on risk, they will look at the type of property, location and you as the client. The best commercial bridging rates also usually start at around 0.85% per month.
As a guide, an interest rate of 1% per month is a good benchmark. For a riskier deal, such as an unusual property or an applicant with heavy adverse credit, rates will be around 0.9% – 1.25% per month.
Finally, loans against land will usually be priced between 1.05% – 1.25% per month. As each application is judged on its own merits, we do sometimes secure lower than standard rates if the risk is low for the lender.
Below is a quick guide to bridging loan rates by security type:
| Bridging loan type | Maximum LTV | Rates From |
| Regulated bridging loans | 75% | 0.55% per month |
| Unregulated bridging loans | 90% | 0.39% per month |
| Semi-commercial | 75% | 0.7% per month |
| Commercial bridging loans | 75% | 0.75% per month |
| Development exit finance | 80% | 0.39% per month |
| Land | 65% | 1.05% per month |
| Property refurbishment finance | 90% | 0.39% per month |
How are bridging loan rates decided?
The interest rate that you pay will vary depending on a number of factors. The main considerations in pricing an application are the following:
- Your credit history
- The type of loan required
- Loan amount
- The loan to value ratio (LTV)
- Your exit strategy
Do I have to pay the interest monthly?
No, in most cases, the monthly interest can be added to the loan and repaid at the end of the loan term, or before if it is repaid early.
This is known as ‘rolled-up’ interest and is the most common way for bridging finance interest to be handled.
Should you wish to make monthly payments, you can do so on an unregulated bridge, but the lender will want to ensure that it is affordable.
We can offer regulated loans with serviced interest, but only for high net worth borrowers.
Are bridging finance rates fixed rate or variable?
Both fixed rate and variable rates are available for bridging finance.
Some lenders fix their rates, while others offer variable rates. If you have a preference for either a fixed or variable rate loan, let your advisor know and we will be able to find a suitable product that meets your needs.
A breakdown of bridging loan fees
Bridging finance applications are usually come with several different fees. They can usually be broken down as follows:
Lender arrangement fee
This fee is payable to the lender for arranging your bridging loan. Often, this fee is added to the loan, meaning you don’t have to pay it out upfront. Lender arrangement fees are usually between 1-2% of the loan amount.
Broker fee
Broker fees are payable to your mortgage brokers for arranging your bridging loan. Most brokers charge a fee of 1% or more on completion of the loan, this can often be added to, or deducted from the loan. At ABC Finance Ltd we don’t usually charge broker fees for arranging bridging finance.
Upfront broker fee
Brokers often charge an upfront fee for processing your bridging finance application. This can’t be added to the loan and must be paid upfront. We never charge upfront fees for processing your application and recommend that you do not pay upfront fees to a broker under any circumstances.
Valuation fee
The valuation fee is payable for the undertaking of a basic survey of the security property. The report is usually quite basic and covers only the value of the property, some structural and demand issues and whether the property is suitable security for the loan.
The fee is usually payable early in the application process. We always try to ensure the lender is otherwise happy with the application before asking for the valuation fee to be paid. In some cases, valuation fees can be avoided where the lender will accept a desktop valuation.
Legal fees
Lenders usually require separate legal representation, which is paid for by the applicant. Some lenders will accept dual representation (use of the same solicitor for both sides), which can save time and money.
Exit fee
Some lenders charge an exit fee, usually either equal to one month’s interest, or 1-2%. Exit fees are charged on repayment of the loan and are usually added to the loan balance.
Frequently asked questions
How does loan to value impact the rate I’m charged?
Loan to value (LTV) impacts the interest rate of bridging loans directly.
A higher loan to value application will result in a higher interest rate, while lower LTVs will usually result in a lower rate.
How does property type impact bridging loan rates?
Residential properties usually receive the lowest rates, with semi-commercial, commercial and then land each becoming more expensive.
This is due to the liquidity of these assets – the more liquid an asset, the better security it is considered to be in the eyes of a lender.
How does the legal charge type impact bridging loan rates?
Bridging finance can be arranged on a 1st, 2nd or even 3rd charge loan basis. 1st charge loans tend to pay the lowest interest rates. A second charge bridging loan can either be arranged as a legal charge or an equitable charge.
Equitable charge bridging isn’t favoured by lenders, so loans set up in this way will usually have higher interest charges.
How does credit history affect bridging loan rates?
Lenders issue loans with the idea that they will get their money back, plus some profit by way of the fees and interest charged.
When working with an applicant who has a strong credit rating, lenders can be more confident that they will be repaid on time and in-turn, will accept lower interest charges as a result.
We offer a range of bad credit bridging loan options.
How does the location of the security property affect bridging loan rates?
This factor comes down to your ability to exit the loan.
Property in a location that has a highly liquid property market, and an abundance of available lenders willing to lend, will generally get the best rates. These locations are considered to be most places in England and Wales, plus parts of Scotland.
We can often offer lower rates on bridging loans in London. Some lenders will offer low rates on loans in Northern Ireland too, but this is less common.
