Saved for our customers through our Deal Optimiser service.*
Calculate the cost of a bridging loan by telling us how much you need to borrow in the fields below. Give us some additional information within our Deal Optimiser on the next page to allow us to negotiate the rate on your behalf.
A bridging loan is a form of finance taken if you find yourself in a position where you need to raise finance quickly and flexibly. It’s a short-term loan, a temporary mortgage secured against a property, when the loan is intended to be held for a short period, usually between just a matter of weeks up to 24 months.
Like a traditional mortgage you will need to put down a deposit (or have equity in the property if you are refinancing) however some lenders will accept equity from other property to help reduce the cash deposit needed. Fees will usually be charged by the lender when the loan starts, and interest will apply while you are borrowing the funds.
Our clients usually come to us to source bridging finance when they need access to property finance more quickly than a standard mortgage can provide.
Bridging finance was originally created to bridge the gap between selling your home and buying a new one, however bridging can now help raise finance against a property for a variety of reasons:
You’ll borrow the money you need to fund your purchase for 6, 12, 18 or 24 months. Due to the flexible nature of a bridging loan, lenders will charge higher interest than they would with a traditional mortgage. Therefore, borrowers will want to consider how quickly they can repay the bridging loan. You may plan to refinance or remortgage the property to clear the loan, or the property may be sold to repay the bridging finance. Alternatively you may have funds being raised elsewhere to settle the finance.
The loan is secured against the new property, so if you fail to repay the lender could repossess the property.
Our lenders offer loans from £50,000 to £15 million. The amount your eligible for will depend on the value of the assets you already hold and your income.
You’ll usually only be able to borrow a maximum LTV (loan-to-value) of 75% of the value of the property. However if you have lots of equity in your residential home, or across your property portfolio, you may be able to leverage this by allowing the lender to mitigate their risk by cross-charging, i.e. applying a charge to another property. Some scenarios allow our clients to borrow 100% of the purchase price or property value.
Because it’s a short term loan, a bridging loan interest rate is typically higher than you’d find on a standard residential mortgage. The rate is a monthly one rather than an annual loan and range from 0.39% to 1.5% per month, depending on the lender.
There are usually additional costs to consider, including a product fee and an exit fee if you are able to close the loan facility early. Despite this, it usually works out cheaper to exit the loan earlier as you avoid accumulating more interest.
Lenders will often charge the interest upfront, effectively deducting the expected interest from the loan advance, and if you repay the debt earlier then they will refund that interest back to you. This is commonly called retained interest. Some lenders will allow you to service the interest, so you make monthly interest repayments to the lender, although this is a less common scenario.
We have been able to get bridging loans agreed in a matter of hours and funds released within days. More often we would expect an application to be competed in 2-3 weeks however you should be advised how long your situation is likely to take.
In the case of most bridging loan applications speed is a key factor. Lenders and brokers should be geared up to make the approval process as quick as possible, including electronic identification, automated property valuations, and electronic signatures.
* Total savings achieved since November 2020 based on annualised interest rate saving where deal optimiser service negotiated a lower rate than lender’s published rate.