If you need funds quickly for a property, a bridging loan can help. Use our bridging loan calculator to get an instant estimate based on your property's value and your financial health. Just enter some basic information for a personalised estimate in less than 30 seconds!
Based on the figures you provided, here are your results:
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Our Bridging Loan Calculator isn’t just easy to use; it’s downright friendly. You won’t need to enter any personal details to get started.
Here’s a quick guide:
Once done, the calculator instantly delivers a full breakdown: your estimated monthly payments, total interest, and total amount you might face.
Feel free to run the numbers as many times as you’d like to find the loan amount and term that work best for you. If the calculator can’t generate a loan option based on your details, it’ll flag what might be the issue, allowing you to adjust and explore other solutions.
Key Points to Remember:
Bridging loans are your quick-fix solution when you need cash fast, especially when you’re trying to buy one property but haven’t yet sold another. These loans are usually short-term, making them a versatile tool to ‘bridge the gap’ in your finances.
But remember, these are secured loans. That means you need to put up something valuable—usually a property—as a guarantee.
So before you leap in, think it through.
With bridging finance costs, you need to look at two main things: the interest rate and any extra fees. Here’s an overview:
> Bridging loan interest rates
Bridging loans generally come with higher interest rates compared to traditional mortgages.
Why?
They’re riskier for lenders and are designed to be short-term. You might find rates starting from 0.4% to 2% per month, but this can vary based on your situation.
> Factors Affecting Your Interest Rate
As discussed, the rate you’ll get isn’t random. It depends on several factors:
These are just the starting points that lenders look at when setting your rate.
Bridging loan interests are often shown as monthly rates. That’s because these loans are short-term, usually lasting between 12 and 18 months. You’ll pay interest based on your monthly balance.
If you manage to pay off your loan earlier, say in 6 months, you’ll only pay interest for those 6 months—even if your original term was 12 months.
The best part? Most lenders won’t slap you with a fee for paying early. (No early repayment fees!)
When it comes to bridging loans, interest can be handled in one of three ways:
Apart from the interest rates, you need to budget for budget for various fees. These costs can differ based on your lender and financial circumstances, but here are some typical fees you should be ready for:
Being aware of these fees helps you to grasp the full financial picture of a bridging loan, allowing you to plan your finances more accurately.
>> More About the Costs of Bridging Loans
To help put the above rates and fees into perspective, let’s walk through an example.
Imagine you need to borrow £100,000 for a term of 6 months. Here’s how the numbers would break down:
Table 1: Breakdown of Costs
Description | Amount (£) | Monthly Rate (%) | Notes |
---|---|---|---|
Principal Loan Amount | £100,000 | – | Initial amount you’re borrowing |
Loan Term | 6 months | – | Duration of the loan |
Monthly Interest Rate | – | 0.5% | Charged monthly |
Initial Setup Fee | £2,000 | – | 2% of the loan amount |
Administrative Fee | £145 | – | Fixed fee |
Valuation Fee | £500 | – | Fixed fee |
Legal Expenses | £750 | – | Starting fee + disbursements |
Table 2: Calculations
Description | Calculation Method | Total Cost (£) |
---|---|---|
Principal Loan Amount | – | £100,000 |
Interest: | ||
Monthly Interest | £100,000 x 0.5% | £500 |
Total Interest for 6 months | £500 x 6 | £3,000 |
Fees: | ||
Initial Setup Fee | £100,000 x 2% | £2,000 |
Administrative Fee | Fixed fee | £145 |
Valuation Fee | Fixed fee | £500 |
Legal Expenses | Starting fee + disbursements | £750 |
Total Costs | Sum of all costs | £106,395 |
Notes:
You can use a bridging loan for various legal purposes. Here are some common situations:
Your loan amount has limits, set by factors like your credit score, the property’s condition, and necessary repair costs. Lenders also have their rules that determine your loan size.
No, Scotland generally follows the same rules for bridging loans. However, if you’re buying in remote areas, fewer lenders may be available. Brokers can help you find lenders who do operate in Scotland.
Often, people use a bridging loan to eventually get a regular mortgage. This is known as a bridging mortgage. Lenders use a special calculator to figure out your initial loan amount.
Then, they use a standard mortgage calculator to determine how much of your loan will convert into a long-term mortgage.
Lenders also examine your income, spending habits, existing debts, credit score, and age. Usually, your interest rate drops when you switch from a bridging loan to a long-term mortgage. Bridging loans last between 6 months and 2 years, while a typical mortgage term is 25 years.
Consider consulting a bridging finance broker for tailored advice, as they account for your unique circumstances. To get started, reach out to us. We’ll link you up with a reputable bridging loan advisor to help you make an informed decision.
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