Bridge Loans Explained
If you are looking for short term finance, a bridging loan may be the ideal option. They offer a fast way to access large sums of money and can often be arranged in a matter of days. Bridging loans are typically used for buying property when a mortgage is not available or appropriate.
Loan terms for bridging finance usually go up to 12 months, although longer terms may be available depending on circumstances.
The cost of bridge loans explained
The main costs of bridging loans are usually the fees and the monthly interest. Most bridging loan companies will charge an arrangement fee for setting up the bridge and some, but not all will charge an exit fee when you repay the bridge. Both of these tend to be charged at around 1-2% of the total value of the loan.
Interest rates on bridging loans vary, but tend to be higher than for some other forms of borrowing, such as a mortgage. You may have the option to roll up the interest and pay it when you repay the capital, or to borrow extra to cover the interest and have this added to the total capital to repay.
Applying for bridge loans explained
Bridging loans are usually only available through intermediaries such as loan brokers. You will therefore normally need to contact a loan broker in order to apply for bridging finance. They will be able to advise you on all of the available deals and which offer the best rates, fees and conditions for your borrowing needs.
Because bridging loans are only intended as temporary finance, when you take one out you usually have to specify how the loan will be repaid. This is known as your exit strategy and will usually rely on reselling the property or refinancing with a mortgage or other type of borrowing.
Find the best interest rates and fees on bridge loans
Getting the best deal on bridging finance can be tricky, especially with so many different providers to choose from. Our free bridging loan calculator takes the hassle out of the equation by allowing you to quickly and easily compare bridging loan deals from all the leading lenders across the market.
Looking for a bride loan? Please get in touch with our friendly expert team of loan brokers using the contact form on the right or by calling 0117 313 6058.