Bridging Loan Calculator - Fast Free Calculations
We get it. You're wondering whether a bridging loan is a possibility in your situation, but you don't know the costs and you're not ready to speak to a broker. You simply want an idea of costs to rule it in - or rule it out. Perfect. Feel free to use our bridging loan calculator.
Use our bridging loan calculator to find out how much your loan might cost. This calculator should only be used as an indicative guide for a bridging loan as it only shows average rates & fees.
If you'd like an accurate loan proposal and for more information request a call back
You can also contact us at email@example.com or call 01202 612934.
This article tells you how to use it, how the calculations are typically worked out and offers some really helpful information and insights, especially useful to first-time bridging loan users.
Your Loan Example
Net loan amount -
Loan amount required before interest, fees or any other costs have been added.
Broker fees (2%)-
Calculated as a percentage of the net loan amount. Amount of broker fee is illustrated, and the percentage charged is shown in brackets.
Lender facility fee (0.5%) -
Calculated as a percentage of the net loan amount. Amount of facility fee is illustrated, and the percentage charged is shown in brackets.
Net loan including fees -
This is the net loan amount plus fees.
Monthly interest rate -
Monthly rate of interest charged on the loan facility.
Average monthly interest -
This is the average monthly amount of interest charged based on the full term of the loan. Interest is calculated on the loan balance each month and then added to the facility.
Interest if the loan runs the full term -
This is the total amount of interest that will be charged if the loan is cleared at the end of its term.
Loan to value (LTV) -
This is calculated using the loan amount plus any mortgages left in place, and the total value of the properties used as security.
These fees are incorporated into 'Net loan including fees' shown above.
Valuation fees -
This is the estimated cost if a full valuation is required on the properties offered as security. This figure maybe reduced if a desktop, drive by or existing valuation is sufficient for the lender.
Lenders administration fee -
Most lenders charge administration fees, the amount of which can vary. The fee shown is for a typical plan.
Estimated lender legal costs -
Borrowers are required to pay all legal fees incurred in relation to arranging their loan.
CHAPS Fee -
Lenders are charged a CHAPS fee for sending the proceeds of the loan to their solicitor. They claim this charge back from the borrower.
Redemption administration fee -
Lenders charge an admin fee to remove their charge over the property when a loan is repaid.
Exit fee (0%) -
Some loan plans have exit fees. Almost all of our loans do not.
Redemption amount at full term -
This is the estimated amount required to repay the loan if it runs the full term.
The interest rate you'll find on every online calculator will be an approximation or an average interest rate, this is because every bridging loan lending scenario is unique and the interest rate you'll be offered will very much be based on your scenario. So, what actually affects it? Well here are the criteria that affect it.
- Asset being used as security - Different lenders prefer different asset classes. For the most, property is the preferred asset, but you'll find various lenders willing to lend against everything from plant or machinery, valuable art to boats. However, each property type carries different perceived risks. The less risky the property type is to offload, that is to sell on in order to recoup the lender's capital investment, interest and fees, the more competitive the rate. As a rule of thumb, the more lenders are willing to lend on an asset class, the more competitive the rate, because it's a market-driven price.
- Loan-to-value (LTV) - Different lenders have varying comfort zones of their maximum LTVs. You'll get more lenders willing to loan against low LTVs because, again, there's a perception of reduced risk. The higher that LTV the fewer lenders you'll find willing to take the risk, which will almost probably mean higher interest rates.
- Term - Bridging is considered a short-term financing solution. Short-term means up to 12 months, however, you'll find some lenders willing to go to 24 months. The reason it's short-term is simply that bridging is intended to bridge a gap in finance to enable the borrower to get from one state to another. It's more expensive than traditional mortgages because the nature or purpose of borrowing falls outside of traditional high street banks which aren't allowed to take on riskier lending. Lenders primarily make their money from a combination of arrangement fees and interest and like to recoup their capital quickly so they can lend it back out to the market. In some circumstances, the longer a bridging loan is tied up with a borrower the riskier the loan is perceived because the figure being repaid will be higher.
- Borrower - Whilst non-status credit history lending isn't an issue for bridging lenders, it might highlight the borrower as having a higher perceived risk. Bankruptcy, adverse credit, and low incomes aren't necessarily a problem for bridging but expect to pay a higher interest rate as there are fewer lenders who will want to lend. Again, the less competition for any loan the higher the interest rates or the higher the fees.
Typically, the better types of property that attract the lower interest rates for bridging loans are (in this order) Residential property, Mixed-use property, Commercial property, Land that has planning, and lastly Land without planning.
In the UK, residential property is considered the safest property asset, as over the long term it appreciates in value and there are many people who are in the market to purchase or rent dwellings. This is why lenders will often be willing to lend up to higher loan-to-value (LTV) ratios on residential property - typically up to 80% LTV.
Not all residences are created equal though. A property in a prime location will always attract better rates than one that is next to a major trunk road or motorway.
For the same reasons as residential properties being attractive security for a loan, mixed-use property (also known as semi-commercial) has an element of a residential dwelling incorporated into the building.
The actual LTV will vary from lender to lender, but as a guide, it's similar to Commercial Property at 65% LTV.
Commercial property varies greatly as to whether a lender deems it desirable security, hence why only up to 65% LTVs are typically offered. Even then, the type of use class it has, whether it's a restaurant, hotel, cafe, forecourt, golf club… you get the idea, all impacts its value to the lender.
In addition, the location and demand for that property type will play a significant role in its resale ability.
Land with Planning
Land with planning is typically sought after with developers eager to snap up the opportunity. Developers tend to like to own undeveloped land for speculation.
There are many companies in the UK that specifically seek out these 'land-banking' opportunities and for this reason, it's usually appealing to lenders. However, it's unrealised potential and lenders aren't developers so will price their interest rates accordingly and only typically go to a maximum of 70% LTV - but clearly that will depend on whether the planning is for residential or commercial use.
Land without Planning
Land without planning may not appear at first glance as attractive as land with planning, however that largely depends on what kind of opportunity the land presents.
For example, if the land is 100 acres of agricultural land, that will hold a value and there are specialist agricultural lenders who only finance farm and equestrian land acquisition. If the plot is currently a garden adjoined to a property in a residential area then it will be a completely different opportunity and be valued accordingly. Since the Environment Act 2021, there's been a new gold rush for brownfield sites too, due to developers now being required to offset the green spaces they build upon offsetting the environmental impact of their builds. Land without planning tends to attract a maximum of 50%LTV.
You typically have three interest options with Bridging Loans, these are Serviced, Retained and Rolled up interest. So, let's take a look at each.
Serviced Interest Bridging Finance
Serviced interest means that the borrower services the debt whilst the finance is in place. Typically this would mean the borrower pays the loan interest monthly, and then at the end of the loan duration, the borrower will then repay the capital amount. In reality, those who seek out bridging finance are rarely in a financial position to meet those interest payments each month because they're reliant on the exit of the loan to realise the profit of their transaction.
Retained Interest Bridging Finance
With retained interest there are no monthly interest payments required from the borrower because that projected monthly interest has already been added to the loan amount, effectively the borrower is not only borrowing the capital, they're also borrowing the interest too and as such interest is charged on the interest. This is a popular choice for borrowers as they often don't have the financial means to service their debt until the exit of the loan.
Rolled-up Interest Bridging Finance
With Rolled-up interest there is again no monthly interest payments required from the borrower and the interest amount is added to the loan amount. The difference with Rolled-up interest Vs Retained is that the lender does not charge interest on the interest already added to the loan.
It's important for borrowers to understand that both Retained and Rolled-up interest increases the overall loan amount, which is called the gross loan in the industry. That gross loan amount cannot exceed the maximum LTV or the lender.
Defining a typical bridging loan interest rate is incredibly difficult as it's not solely determined by the factors above but also by the appetite of lenders and how much the finance costs the lender to borrow. Most large lenders don't just sit on a pile of cash lending their own money, they're borrowing it themselves and as such, base rate rises directly affect their bottom line.
With recent successive base rate hikes, as of March 2023 we're currently on consecutive hike number 11, the base rate has climbed from its 10-year sub 1% to pre-2008 crash of 4.25%. The days of 'cheap' credit have been resigned to history and the general consensus is that this is unlikely to return.
If you're looking for a ballpark % though, as of 2023 interest rates for residential bridging loans start from 0.44% per month, and commercial bridging loans start from 0.65% per month and both can go all the way up to 2% per month.
Aside from the interest aspect of a bridging loan, in the UK they typically come with a range of additional fees and charges. These include arrangement fees, valuation fees, legal fees, stamp duty, early repayment charges and exit fees.
Arrangement fees are charged by lenders at the start of a loan agreement to cover the work involved in setting up the loan. These fees are typically 1-2% of the loan amount.
Broker fees are charged by bridging loan brokers at the start of a loan agreement to cover the work involved in preparing the borrower's application and sourcing the most competitive options. Good brokers can pay for themselves several times over as they'll know which lenders want which types of loans. The broker will present the borrower's case in the best possible light to create interest and where possible will seek to generate a competitive marketplace for the deal between multiple lenders which offers the borrower the most beneficial outcome. It's important to acknowledge that with Bridging Loans, the most beneficial outcome may not necessarily be the cheapest as it may come down to the maximum loan available or the specific terms of the finance.
Valuation fees cover the cost of assessing a property's value and condition, which is done to determine how much they are willing to lend against it. Fees vary depending on the size and complexity of the property but can range from £200 to £1,000 or more. Whilst every valuation will be completed by an RICS-assessed valuer, some lenders require the valuation to be completed by someone on their valuation panel. For this reason, before getting a valuation on a property it's worthwhile to know which valuer your lender will want to use. Asking whether you can have a copy of the valuation report could also be of benefit to you. Should that lender not approve your finance then you could potentially negate further valuation fees as some lenders are willing to use valuations providing they're within a certain time-frame ie. less than 3 months old. This however is typically only applicable to residential bridging loans.
Legal fees cover the cost of legal advice and customary paperwork associated with a loan. These fees can range from several hundred to several thousand pounds depending on the complexity of the situation.
Early repayment charges (also referred to in the industry as ERC) are imposed by some lenders if you pay off your loan before its due date. These can range from 1% to 5%, depending on how early the loan is repaid.
Finally, exit fees are charged by some lenders when you pay off your loan. These are typically 1% of the amount outstanding at the time of repayment.
It's also worth noting that not all lenders charge all fees and some lenders have different ways of charging the fees outlined above.
To calculate the monthly interest for a bridging loan amount, simply use our calculator and enter the following information:
- Loan amount required. (This must be entered in whole pounds ie. 100000)
- Loan term required. (This is the number of months. Many lenders require a minimum of a 3-month term so if it's less than that, expect a higher arrangement fee or interest rate)
- The number of properties to be used as security. (This needs to be a numeric value ie. 1. The more properties you use as security the more the valuation reports and solicitor fees will cost as the work involved in valuations, searches, and registry fees all increase.)
- Property value for each property. (This should be the current market value of the property and not what it was last purchased for nor a guess as both these values will likely be incorrect and jeopardise the viability of the loan being agreed upon. To get a fair representation of the actual market value of a residential property check out our article Top 6 websites that offer instant online UK property valuations or if the property is a commercial property then read our article Best 5 property websites for sourcing your next commercial purchase.
- The existing mortgage balance of each property. (This should include any secured borrowing such as Mortgages, 2nd charge mortgages or bridging loans.
- The type of interest you want to choose. (Your options are Rolled-up or Paid Monthly which is the same as Serviced Interest).
The very basic criteria is this: You will need to own a property in the UK or Europe. That property must have enough equity in it to achieve a loan-to-value (LTV) lower than the lender's maximum LTV, after the interest and fees have been added to the loan amount. You must have also a viable method of repaying the loan that takes no longer than 24 months.
Bridging loan rates are another way of saying interest rates for bridging loans. The interest is usually expressed per month, not per annum. Interest rates typically vary from 0.44% to 2.00% per month. Here you can find Finbri's current bridging interest rates.
Keep this simple equation in mind, the less risk to the lender, the less the overall costs of the finance should be. With that in mind, if you're highly geared on one property - that is to say that you have a high loan-to-value on one property but in fact you own two properties. You could consider using multiple properties as security thus achieving a lower overall loan-to-value. Whilst there may be increased costs from valuations and solicitors this would likely be offset by the reduced interest charges.
Every broker should be able to offer a bridging loan proposal for free. Some brokers require an application fee to take the proposal forward to an application to avoid borrowers who have no intention of taking out a bridging loan. However, those that do charge an application fee should also offer a full refund on that fee when the loan is completed. From a broker's perspective, a lot of work is undertaken by the broker in order to package the application and source the agreement in principle from multiple lenders.
How can I get an instant online bridging loan quote?
Our bridging calculator provides an overview of approximate costs related to bridging loans. No personal details are required for receiving the instant calculations but if you do wish to obtain a formal quote proposal then also complete your contact information, arrange a call or call us on 01202 612934 for immediate attention.
What is a bridge loan calculator?
A bridge loan calculator is an online tool that will help you to work out which deal may be best suited to your needs. By entering in the required information, such as interest rate, fees and term period then you will be provided with a total bridging loan amount.
How do you use a bridging finance calculator?
Let's take a look at how a bridging loan is calculated and share some tips when using this calculator on Finbri.
When looking for a bridging loan its important to understand what types of things may affect your overall cost.
These include fees, interest rates and other costs associated with the loan. With this in mind it can help to use a bridging loan calculator as it can also show you how the cost of the loan is broken down and what to expect.
What types of calculator are there?
There are two types of bridging loan calculator, each with their own pros and cons:
- A generic calculator - doesn't require you to input your personal information to obtain an approximate cost of a bridging finance, so its often very quick to complete but it isn't tailored to your individual circumstances so can only be used for indicative costs; or
- A specific calculator - tailored to your individual circumstances so able to obtain live quotes from one of more lenders, but requires you to input all your personal information to obtain a loan quote so is more time intensive. These specific calculators are typically powered only by high street banks which means they're unlikely to search the whole of market for the best rates and unlikely to be able to accept complex borrowing requirements. Often when a specific calculator is used the borrower will still be required to complete a phone conversation with the lender to obtain an accurate loan proposal.
So which is the better calculator to use?
The most compelling loan proposal for a lender to receive is one that clearly shows its strengths enabling that lender to quickly understand its value. A online bridging loan calculator is a good way to get indicative costings but where you have unusual, complex or niche loan requirements or where your circumstances are urgent its advised that you reach out to a specialist broker to help you package your requirements in a way that lenders want to lend against.
How do I use the bridging loan calculator?
It's pretty straight forward. For this calculator fill out the following box with the correct details, there are useful help tips on each if you're unsure what each box requires - just hover over the question marks to reveal the help tips if you're on a desktop device or on a mobile tap the question mark icons. Lastly, press 'calculate' and you can immediately get results.
Will I need to pay for my bridging finance quote?
No, it's unusual to charge a fee for obtaining an initial indicative bridge loan proposal which is sometimes referred to as a Decision in Principle (DiP), Offer in Principle (OiP) or Agreement in Principle (AiP). However, many brokers do charge an upfront fee for proceeding with an application due to the time required for administering the loan. These charges are often waived either if the application is unsuccessful and the broker can't help secure a bridge loan or where the bridge loan completes.
Benefits of using a broker?
By using a broker the potential borrower can access quotes from the whole of market and as brokers have relationships with all types of lenders, including private offices and investors, they can typically achieve the best deal by creating a competitive market and ensuring multiple lenders want to lend on the deal.
What do I need to qualify for a UK bridging loan?
If you are looking for a large bridge loan then the main things that you need in order to be eligible for this type of finance is equity in your property as most lenders prefer to secure the loan against property or land. Without owning property yourself it may be difficult to obtain bridging finance.
What is the interest rate on bridging finance?
There is no set interest rate for bridging loans and instead it will vary from one lender to another, typically its between 0.5% and 4% per month but its completely dependent on your particular situation hence why we recommend contacting us directly for a tailored free no obligation proposal.