Rates and Fees
It is important to note that the fees and interest on a bridging loan will be higher than those for a normal residential mortgage and this is due to the short nature of this type of loan, with the interest typically added to the loan sum at the end of the term. It can vary between 0.44%-1.75% per month.
However, the good news is that currently bridging loan rates are lower than ever and as lenders are competing against each other they are all trying to provide competitive interest rate charges. Other factors will also affect rates include but are not limited to the type of security you have provided, the loan to value requested, your credit history, the purpose of the loan and the loan size.
This table is a guide of the rates of a few different types of bridging loan:
|Security||Max LTV||Rates From|
|Land with Planning||65%||0.75%|
|Land Without Planning||50%||1.00%|
In terms of commercial bridging loans –these are higher and usually start at around 0.65% per month. For riskier cases or where adverse credit may be involved then rates can be anything form 1% – 1.75%.
In relation to fees, there are often several different fees that are payable as follows:
Lender Arrangement Fee-a fee payable to the lender for arranging the bridging loan. These usually vary from 1-2% and in most cases you will not have to pay this fee upfront and it is added to the loan. In some cases, lenders will ask for a percentage of the arrangement fee like a deposit and in order to secure some sort of commitment from the borrower.
Admin Fee – Not all lender charge this, but if they do, it is usually between £295 and £400.
Valuation Fee-This fee is payable for undertaking a basic survey of the security property and is usually paid at the beginning. It will cover the value of the property, structural and demand issues and whether the property is suitable security for the loan.
Legal Fees– Lenders will expect payment for their own legal fees to be paid for by the borrower. Some lenders will accept the same legal representation which deals with both the borrower’s own legal fees and the lenders.
Exit Fees: Some lenders will charge an exit fee of about 1-2% or an amount equal to one month’s interest. These are usually charged on repayment of the loan and added to the redemption figure.
You will be glad to know that Finbud do not charge any broker or packager, success or commitment fees for standard cases.
It is a competitive market and Finbud can help you by finding you a lender that can provide you the best rate. This involves us comparing all the options with several lenders. It is important that a proper comparison takes place and a check is made that there are no hidden additional costs. In the end it’s about doing the right checks to ensure that you are happy with the particular loan secured, happy with the lender and at the same time you manage to save money!