Bridging loans can be a financial lifeline in many situations for property purchases, refinancing, and developments with speed being the main USP.
One question we are asked quite often is which lenders give the most competitive terms and are able to complete the loan quickly.
There is so much to this question, but in this article, we touch on the cheapest rates currently available, the calculations behind a bridging loan, and other upfront costs you need to consider.
The Following Topics Are Covered
What Are The Cheapest Bridging Loan Rates Available?
The costs depend on many factors including the term for which you are borrowing the loan, the property, and the planned exit route to name a few.
Most bridging lenders will quote rates on a monthly basis purely because they are considered short-term loans with the maximum term generally being 24 months. At the time of writing, projected interest rates are on the rise the average rate now being around 0.9% per month which equates to 10.8% per annum.
To understand the full costs associated with a bridging loan, you can read more here
As with any loan, it is important to understand what the costs are. Head over to our Bridging Loan Calculator which gives a breakdown of other fees payable including administration, arrangement, valuation, and estimated legal and exit charges.
Comparing Bridging Finance Rates UK
It's not easy to compare thousands of bridging loan products and lenders out there. Many calculate rates on a case-by-case basis. With extensive experience within this sector as well as access to over 50 lenders, we are able to offer competitive deals that are not generally offered to the wider public.
Eligibility Criteria For Cheap Bridging Loans
The benefits of a bridging loan are less focused on your income or salary and more o the asset itself and exit strategy.
The criteria lenders will look at vary in order of importance depending on the type of property, but will always include:
The stability of your exit strategy.
How good your credit rating is.
The value and security of the property.
Your experience as a developer or landlord.
How much deposit you have available.
Is Comparing The Cheapest Bridging Loan Rates Simple?
Not always! There are countless bridge loan products and lenders available, many of which calculate rates case by case. Additionally, there are numerous niche lenders offering competitive rates that are not made public.
Tables are not a good way to decide whether to borrow money because they cannot account for the circumstances and typically only display products that have been paid for by the lender to advertise them.
What Deposit Value Is Required to be Approved for Bridge Finance?
Bridge lenders typically offer up to 75% of the project's total value, also known as the loan-to-value (Loan to Value). Depending on the lender, it may be limited to 50% or 60% in some circumstances.
As a result, you'll typically need to make deposits of at least 25%, 40%, or even 50%.
An independent broker will be able to suggest lenders with less stringent deposit requirements if you need a bridge loan and your deposit is lower than the industry average of about 35%.
This article is intended to provide a general understanding of the topic. The contents should not be treated as advice.
Accelerated Finance Limited only considers applications for commercial or investment properties. Accelerated Finance Limited is not regulated by the financial conduct authority and only provides unregulated loans via our network of lenders. Your property is at risk if you fail to make payments on a Mortgage Contract.
Please note that Accelerated Finance Limited and its employees do not give financial advice or recommendations on any product.