Bridging loan calculator

Unregulated bridging loan interest rates are typically between 0.8% - 1.0% per month, but can be more or less depending on your particular scenario, because each bridging loan rate is assessed on its own risk.

A specialist broker can help you work out a rate specific to your needs.

If you are flipping property, or the property will be used as a buy to let or commercial let, you will need to talk to a broker who can find you an unregulated bridging loan interest rate.

If your property will become your home, or a close family member will live in it, you need to talk to a broker who can find you a regulated bridging loan interest rate.

The amount that you can borrow will depend on the property value. Most bridging loan lenders will offer you up to 25% of the maximum loan to value ratio of the property.

Bridging loan rates are the rate of interest you will need to pay to borrow money from a lender. Some of the factors that can affect your bridging loan rate are:

• Property value
• Amount of money that you are hoping to borrowing
• Type of property
• Your monthly income
• Your personal finance and credit history
• Length of the loan
• Legal charge type (if it is the 1st or 2nd charge on the property)
• Reason for the loan

Bridging loan rates are calculated on a number of factors. The two most influential are the value of the property that you are securing the loan against, and the amount of money that you wish to borrow.

Each lender will assess your case against their criteria and provide you with a rate, based on the risk that they perceive is associated with your loan. If your loan amount is high and the case carries high risk, a lender will propose a higher rate to guard against the higher risk associated with the lending.

There are two ways of paying interest on a bridging loan and two ways of calculating the costs per month - serviced payments, where you pay monthly, and retained interest where you pay at the end of the term.

• Serviced payments - this option gives you the maximum borrowing from day one. Serviced bridging loan costs are calculated based on paying the interest monthly. The capital lump sum must be repaid at the end of the loan. This method of borrowing suits customers who will have a consistent, regular cash-flow throughout the loan term and will be able to service monthly payments without over-extending themselves.
• Retained interest - taking out a bridging loan with retained interest means you do not repay interest until the bridging loan is paid off in full. When calculating costs on a bridging loan with retained interest, the total borrowing must be within lenders loan to value restrictions - e.g. to calculate the amount you can borrow, you must include the amount of borrowing, plus the retained interest owed, which in total can’t go over the maximum loan to value.