Compare Bridging Loans
Compare Bridging Loans provider’s side-by-side with ease. Bridging Loans are a way of raising funds to purchase a property where completion time is critical, or your income status is not acceptable to high street lenders.
- Annual Variable Rate
- Minimum Loan
- Maximum Loan
- Maximum Term
- 24 Months
- Maximum LTV
What are Bridging Loans?
Bridging Loans are a short term funding option which can be arranged in a matter of days (as apposed to weeks or even months with a traditional mortgage). The main reason is that a Bridging Lender is not assessing the borrower’s ability to repay the loan in full. They are simply weighing up the value of the asset, and the loan requested against it. Factors such as the borrower’s ability to service the repayments on the loan, and the borrowers plans for existing the facility also can have an effect on the interest rate offered.
What are the costs?
Typically a bridging lender will make take arrangement charge to put the bridge in place. This would be in the region of 1-2% of the loan required. The average monthly interest rate is again in the 1-2% range (or around 12-24% per year). The only other cost to factor in are; valuation costs, conveyancing costs and stamp duty.
How much can I borrow?
Most bridging lenders will lend up to 75-80% against the ‘90-day valuation’ of the property. A ‘90 day valuation’ is used as if a borrower were to default on a loan the property would have to be repossessed and sold quickly to allow the lender to recoup their funds. The ‘open market value’ is often not achievable in the timescales available. Therefore the 90 day valuation is often 15-20% lower than the open market rate.
What can Bridging Loans be used for?
- Buying Property at Auction
Bridging Loans are ideal for meeting the 30 day to 6 week settlement window which most auctioneers operate. You then have time to organise a long term, low rate Commercial Mortgage to exit the bridge, which can take up to 3 months to complete.
- Buying, Renovating, and Selling On.
If you are planning on buying property, doing it up, and selling it on, then a bridging arrangement can work out more cost-effective than a commercial mortgage (once you take the arrangement fees and redemption penalties into account).
- Short Term Cash Flow Solution
If you own a property and need access to cash quickly and for a short term only then a Bridging Lender could be ideal. They can complete a deal within a week from initial application to funding. The interest rates are high but as the money is only lent over a few months it is surprising how efficient this can work out to be.