What are the best bridging loan rates in 2019?
We get asked daily what are the best bridging loan rates currently in the UK. This guide will educate you on the different options and rates that are available for bridging loans in 2019.
Bridging loans are typically used when purchasing a property whereby there is a requirement of high amounts of cash for a short time frame. They are available for both personal and commercial customers and range from £10,000 to £250 million+. Typically the interest rates on a bridge loan are low. Due to the high value, this low interest rate can be quite costly to clients. As with a mortgage, bridging finance can be variable and fixed over the term.
Variable rates will fluctuate over the term of the loan so the total amount you pay back is unknown. Fixed bridging loan interest rates will ensure you know the total amount repayable, which is great if you require certainty on your loan.
You can pay the interest and loan back in various ways as outlined below:
Here are the main ways…
- Monthly: Monthly amounts are agreed and paid monthly. Both the interest and loan are paid back.
- Deferred/Rolled up: You pay the full loan value and interest at the end of the loan term.
- Retained: The interest is borrowed and the total amount is calculated at the start of the loan term and paid back at a later stage.
Are there any other rates to pay on my bridging loan?
Yes there is not only interest to pay on your bridging loan, see below:
Bridging loans are typically packaged by a broker such as ourselves. Admin fees are added to the loan as well as broker fees or arrangement charges. Some lenders have exit fees however the fees do vary on lenders or the broker used. Some brokers, such as ourselves, The Bridging Loan Company, charge NO upfront fees.
How do you compare bridging loan rates?
Comparing bridging loan rates can be tricky. As said above, it is difficult due to so many lenders having different fees and criteria to meet. We would always recommend contacting us so that we can discuss your requirements and then compare the most suitable options for you.
By using our bridging loan calculator you can get an idea of various lender’s rates and then work out the rates on your bridging loan. You would be required to know your bridging loan rates, APR, exit strategy and loan term (eg, 3 months or 2 years).
At The Bridging Loan Company, we can search the best bridging loan rates in 2019 quickly and provide you with indicative terms quickly, usually within 2 hours of enquiry.
What can i borrow with a bridge loan?
Once you have got your head around the above, you may want to know how much you can lend? Below are your answers:
Bridging finance loans generally range from as low as £10,000 to over £250 million. This is for both personal and commercial bridging finance as well as development loans. We, as a bridging finance broker, work with many lenders including mainstream banks and private investment funds all of which have varying criteria and loan amounts that they will lend.
By using a broker such as The Bridging Loan Company, we will immediately know which lenders to discuss your case with on enquiry. Due to the flexibility of bridge loans, we should be able to place you with a lender as long as the strategy is evident on payback.
Are bridge loans calculated on my income?
Unlike mortgages, bridge loans do not require proof of income. Usually the loan is secured on an existing asset or property as well as the asset or property that you are looking to purchase. Also poor credit issues and impaired credit ratings may not matter as long as security is there for the lender. Great news!
Is there a limit on the value of lending?
In short, no. As said above, if you can provide security and a clear case for the lender receiving their money back as agreed then your bridging loan should sail through. Some bridging loans that are higher value may attract lower interest rates, especially in 2019 as bridging finance is back on the rise.
If you are looking for a bridging loan of any value, contact us by clicking here.
Will i need a deposit to secure the best bridging loan rates?
Bridging finance deposits range from lender to lender. Finance from Halifax bridging loans, Santander bridging loans and bridging loans from Nationwide bank will attract higher deposits than other private lenders.
On average, generally the loan to value rate or LTV is around 70% to 80% of the total loan amount. Some lenders require a higher LTV and others will be happy with around 50%. Again, by contacting The Bridging Loan Company, you can be assured we will find the lenders that are matching your required loan to value rates.
If you are looking for bridge loan with a specific deposit contact us today.
How to get the best bridging loan interest rates
In order to get the best rates on your bridging loan we search the whole of market as we have access to over 200 lenders. By having access to the whole of market we can ensure that we can source the best available bridging loan rates for you. Some of the below points are indicators that may effect your rates on your bridging loan.
What is the eligibility criteria?
The best way to access the best bridging loan rates is to be able to meet the criteria of as many lenders as possible. Yes, we know that your circumstances are in most cases fixed and also unique but it does help! We can access the best bridging loan lenders with some of the below points, all of which help with a quick application.
Ideally the below is required for fast bridging finance payouts and completions.
A clear exit strategy
When taking out a bridging loan whilst looking for the best available rates it is paramount that you have a clear exit strategy. This sometimes is the deal breaker for lenders. Exit strategies range from the below:
- Usually an exit strategy is a remortgage
- Sale of the property or asset that is financed by the bridging loan
- Sale of assets that was secured against the bridging loan
In order to secure the best rates for your bridge loan, your exit strategy must be clear and sound. Sometimes a ‘non’ standard exit strategy can be taken out where we would speak to specialist lenders that deal with these types of bridging finance.
A good credit rating
Although in many cases lenders do not take into account your credit rating, it may help in cases where lenders want some additional security. With a good credit rating you would be in good standing to secure the best rates of interest if the lender decides to take your credit rating into account.
Sometimes you may have to take out a second charge bridging loan so this would attract higher rates of APR and interest. As said in this news blog above, as long as you can provide security and clear exit strategies then your credit rating should not be an issue.
We do work with many clients that have adverse credit history and we have been able to secure them some of the best interest rates on their bridging loan. Contact us today if you have poor credit and are looking for a bridging loan. If we can not help, it is highly unlikely that anyone else can.
Experience in bridging finance loans
Having used bridging finance before can help give confidence to your lender. Many of our clients that use our brokering services for development loans are experienced developers that can offer a track record of bridging loans that they have taken out. Many of these have paid back their loan successfully which shows competence. This can lower their interest rates.
Sometimes, especially when purchasing property, you can work a bridge back and make it profitable. For example, if you are looking to purchase property with your loan, you will be a cash buyer. This enables you to make a cash offer as such there is then no chain. We can look at other ways to also make the bridging loan pay for itself and not cost you a penny. This however does not always work but we do try where possible.
Factors such as the value of the asset or in most cases, property, on completion at the end of the term is taken into account. If the market is in decline on taking out the loan, this may reduce the possibility of getting the loan.
Able to provide security for the lender
In many cases, bridging loans are taken out and secured against a property. Being able to secure the loan against a property that has plenty of equity is ideal and helps loan applications sail through. Other criteria however must also be met as specified by the lender.
Sometimes the bridging finance can be secured against assets such as high value cars, boats and many other assets. It is less common for the larger, mainstream bridging lenders to secure your bridge against these types of assets but we have lenders that will let you use these types of assets.
If you are unsure what you can secure your loan against please contact us so that we can discuss your circumstances and pass you to one of our experienced packagers who will help with any questions and queries.
Previous property experience
One of our points above touched on the benefits of having previous experience with bridging loans. Many of our clients that have previous bridging development and property experience sail through the loan application process. Some of the more experienced clients can pass loan applications within 48 hours.
That said, many clients who come to us with absolutely no experience also sail through the process. Industry experience is in no way essential with bridging finance.
Either way, no matter what your circumstances, we are sure to be able to help you. We access the whole of market and are able to source both mainstream and private investment funds. If we can not facilitate your bridging loan then it’s unlikely that any other company can. We recently, in July 2019 have passed a £6,000,000 bridging loan for a client that was turned down by over 76 lenders!
A substantial deposit can help
As with any finance agreement, you will always reduce the repayments, APR and interest paid with a larger deposit. This is how to get the best bridging loan rates available. The majority of lenders will ask for a deposit of around 25% where you will get good rates. It is when you reach the 40% to 50% deposit value that you can really take advantage of the best rates.
You would still need to have positive indicators and satisfy the requirements of your lender, as well as the important exit strategy.
Are bridging rates lower or higher for companies?
In most cases you will not attract any better bridging loan rates by using a limited company to apply. Infact this can actually delay the application as there are more checks to go through than with a private client. Depending on the loan security and other factors, you could be asked to provide a personal guarantee.
To conclude, you are no better putting your finance through a limited company and you may not necessarily get any better bridging loan rates.
Are London bridging finance rates higher?
Generally speaking rates for bridging loans in London are the same as the rest of the UK. Property prices are higher however but this will rarely effect your actual interest rate. Some of our private investor lenders specialise in London properties and offers quick valuations due to their central London location.
If you are looking to get great interest rates on a London property for your bridging finance, we are sure to be able to help.
Can the type of property effect the rates?
Mostly, a bridging loan is to purchase land and property. They can be used to purchase residential, commercial, mixed and unmortgageable buildings.
The rates you’ll get when using a bridging finance loan to secure residential mortgages are mostly the same as other property types. Lenders decide which mortgage bridging loan rate to hand out on a case-by-case basis, but tend to reserve the most lucrative rates for borrowers with:
- A clear, strong exit strategy
- Clean credit history
- A substantial security property
- Previous experience in property
- A good deposit
The exit strategy for residential bridging finance loans would usually involve moving the funds to a residential mortgage at the end of the term.
Use our bridging loan calculator to see what rates you may pay on your finance. Simply input your information and APR and get an idea of your repayments and rate.
Commercial property bridging finance rates
The rate you will get if you’re using a bridging finance loan to buy a commercial property can be higher. As long as you evidence an exit strategy, a favourable deal is possible. Some providers will not lend for certain commercial property types like petrol stations as they consider them risky to finance.
The ones which do may cap loan to value at 55-65% unless you can prove it is a good investment and they might request to see a solid business plan to assess the viability of the bridge loan.
Are there any alternatives to a bridging loan?
If you are still unsure if a bridging loan is not the right product for you, then there may be some other potential options to finance your asset purchase. We would advise that the best course of action would be to contact us so that we can discuss your circumstances and look at any other options if bridging finance is not your desired course of action.
Other financing options could be a potential such as a mortgage, secured loan and asset backed financing. Our experienced team of brokers and packers are on hand to help you purchase the property or asset that you are requiring finance for.
Many of our bridging loans are passed within 3 weeks of application but we sometimes can pass them as quick as 48 hours.
Speak to our expert bridging loan advisors now
If you would like more information on anything in this article, then please contact us on email@example.com or use the contact form on our contact page by clicking here.
There are absolutely no upfront fees when taking out a bridging loan through us. In addition we do not credit check at any stage of the application and upon the infrequent time that we may need to credit check you, you will be informed and asked for signed permission to do so if required. Thanks for reading and we hope you took some good points and understanding from our bridging loan rates article!