Bridging Loan Calculator

How to Use Our Calculator

• Input the loan amount: Enter the amount of money you need to borrow.
• Input the loan term: Enter the length of time you need the loan for (in months).
• Interest rate: Use our suggested rate, or the rate you may have been quoted otherwise.
• Click on the ‘Calculate‘ button.

The calculator will then show you the following information:

• The maximum amount you can borrow: This is based on the loan-to-value (LTV) ratio, which is the percentage of the property value that the lender is willing to lend you.
• The monthly interest payment: This is the amount of interest you will be charged each month on the loan.
• The total cost of the loan: This is the total amount of interest and fees you will pay over the life of the loan.

Bridging Loan Rates Starting From 0.55%

See how much a £100,000 bridging loan might cost using the table below. Want to try a different figure? Use our calculator for a quick estimate. For exact costs and advice, book a call with one of our experts. They can explain interest rates and answer your questions. *All rates quoted are subject to individual circumstances.

How is Interest Calculated and Added to Bridging Finance?

Interest on a bridging loan is typically calculated on a daily basis, where the annual rate is divided by the number of days in the year and then applied to the outstanding balance each day. Over the loan’s short duration, this method allows interest to accrue progressively, ensuring that even minor fluctuations in the balance are reflected in the total cost.

Depending on the specific terms of the agreement, the accumulated interest may either be paid regularly or added to the principal, a process known as capitalisation, which can result in compound interest and ultimately increase the overall repayment amount.

Bridging Loan Eligibility

Each lender will have its own set of bridging financing standards that a borrower must meet to be approved for a loan. The following categories are the most common:

• A private person, partnership, or limited corporation.
• Over the age of 18: Some lenders have an upper age limit.
• Live or have a registered address in the United Kingdom.
• One or more properties which the loan can be secured against. This is known as a “security”.
• Has a clear exit strategy in place, such as selling the property or refinancing.
• Wants to borrow at least £20,000.
• Employed, self-employed, or retired.

Note: While security is necessary, your credit score and income are often not factors in a decision for a bridging loan.

What Type of Property Will be Needed For Security?

When securing a bridging loan, various types of property can be used as security, including:

• Residential properties for example; houses, flats, bungalows, and houses with multiple occupants.
• Commercial properties such as retail unites, restaurants, takeaways and offices.
• Properties in need of significant repair.
• Projects that are in various stages of completion.
• Land holdings.

This wide range of options means you can use different types of property to secure your loan, depending on what you own and how much you need to borrow. Multiple properties can be used to secure your loan.

A survey based on the reasons why a bridging loan was taken out showed the following:

When to Work With a Broker for Bridging Loans

Deciding between a lender and a broker depends on your loan requirements. Brokers offer wider lender options, expertise in navigating the application process, and potentially better deals, but charge fees. Direct lenders can be cheaper, but they require more legwork and there are limited lenders that you can go to directly.

Cutting the cost of a bridging loan:

To reduce the cost, consider using a broker such as UK Property Finance to negotiate better terms with lenders. If you’re buying one property and selling another, using both a security can often lower your borrowing costs. However, remember that any existing mortgage on these properties will impact the overall loan amount you can borrow.

Bridging loan interest calculation:

Bridging lenders have several methods for calculating, charging, and rebating interest. The information that follows applies to the great majority of the resources that we offer:

Interest is rolled up:

• Interest is charged on the balance outstanding.
• Interest payments are not needed, thus the monthly interest charge is added to the account balance each month.
• Compound interest will raise the balance that remains every month.

Paying the loan earlier:

• Bridging loans are often set up with 12-month maturities, with no early redemption fees.
• The minimum loan duration is usually one month, which means you may interest for the month, even if you repay earlier.

After the first month, you’ll only pay interest for the days you have the bridging finance. For example, if you repay after 3 months and 10 days, you’ll pay interest for 3 full months and 10 days.

Bridging Loan Costs

Bridging loans often involve a range of fees and charges that can significantly add to the overall cost of borrowing. All of which we explain below:

Administrative Fee:

• If the loan is taken out, the lender will levy an administrative fee of around £295.
• This fee is not an application fee; it is payable only if you take out the loan.

Lenders Arrangement Fees (also known as Lender Facility Fees):

• Most lenders charge a 2% setup/administration fee.
• This fee is usually calculated based on the total or net loan amount.
• It is typically added to the loan, but you have the option to pay it upfront.

Valuation Fees:

• Costs vary depending on the value of the property(s) being used as security.
• The location and estimated value are key factors.
• Our calculator provides an estimate for the cost of the valuation for mortgage purposes.
• Desktop valuations are less costly and quicker to complete; they are used wherever possible.

Redemption Charge:

• Some lenders impose a redemption fee when a loan is redeemed.
• This fee covers the legal expense of removing the charge from the secured property.

Solicitor Fees:

• The lender hires a solicitor to handle the loan contracts and to place a charge on the security property.
• The costs associated with these legal services are charged to the applicant.
• Our calculator provides an estimate for the amount paid for the lender’s legal expenses.

Loan amounts are based on LTV, and interest rates vary by lender.