Interest Rate for Bridging Loans
Interest rates are the cost of borrowing money for a loan.
They are an important factor to consider when considering taking out a loan. Bridging loans are short-term loans that allow people to make a purchase despite a gap in the available funds. They are typically used to “bridge” the gap between the purchase price of a property and the long-term financing being arranged.
The interest rate that borrowers pay when taking out a bridging loan can have a significant impact on the total cost of the loan. Interest rates on bridging loans are typically higher than other types of financing.
As a result, it is important for borrowers to understand how much they’re paying in interest and what factors are influencing the rate they’re offered.
This guide will explain the interest rate in relation to bridging loans, and how it affects the borrower.
You can find our standard bridging loan and development finance rates below.
Please bear in mind that the rates we're able to offer will be based upon your individual circumstances and the merits of your specific requirements.
We search the whole of market to ensure we source you the most competitive deals and have access to exclusive products so we recommend you contact us to obtain a free no obligation loan proposal today.
Our bridging loan rates
| Purpose | Rates /mo | Charges | Value | LTV / LTGDV |
| Bridging Loans | From 0.44% | 1st & 2nd | £26k - £250m | Up to 80% |
| Property Development Finance | From 0.44% | 1st & 2nd | £50k - £250m | Up to 65% LTGDV (100% with additional security) 100% Build financing And Joint Venture (JV) Finance available |
| Auction Finance | From 0.44% | 1st & 2nd | £26k - £250m | Up to 80% |
| Property Conversion Finance | From 0.44% | 1st & 2nd | £50k - £25m | Up to 65% LTGDV (100% with additional security) 100% Build financing And Joint Venture (JV) Finance available |
| Refurbishment Finance | From 0.44% | 1st & 2nd | £26k - £25m | Up to 100% with additional security |
| Commercial Bridging Loan | From 0.75% | 1st & 2nd | £26k - £250m | Up to 65% |
| Farm Bridging Loans | From 0.75% | 1st & 2nd | £26k - £250m | Up to 70% |
| Refinance | From 0.44% | 1st & 2nd | £50k - £250m | Up to 75% |
| Business Bridging Finance | From 0.75% | 1st & 2nd | £26k - £250m | Up to 75% |
| Residential Bridging Loan | From 0.44% | 1st & 2nd | £26k - £250m | Up to 80% |
| Land Bridging Loan | From 0.75% | 1st & 2nd | £50k - £250m |
Up to 70% with planning |
| Tax Bridging Loan | From 0.44% | 1st & 2nd | £26k - £50m | Up to 75% |
| Urgent Bridging Loan | From 0.44% | 1st, 2nd & 3rd | £26k - £250m | Up to 80% |
| Second Charge Bridging Loan | From 0.75% | 2nd | £26k - £50m | Up to 65% |
| Probate Loans | From 1.50% | Secured against inheritance | £20k - £250m | Up to 60% |
| Divorce Settlement Loan | From 0.44% | 1st & 2nd | £26k - £25m | Up to 80% |
| 100% Bridging Loan | From 0.44% | 1st & 2nd | £26k - £25m | Up to 100% |
We're ready to help package up your development proposals or bridging loan requirements so they achieve the best rates possible from our lending panel. Arrange a call with one of our experts today
What is the interest rate for a bridging loan?
The interest rate for bridging loans is the rate at which interest is charged on the loan, usually expressed as a monthly percentage or a monthly rate (per month) which differs from mortgages that usually show their interest rate in terms of an annual percentage (per year).
Interest rates can vary between lenders, and may be tied to the terms of the loan, such as the loan term, amount borrowed, credit worthiness of the borrower, and the type of security given to secure the loan.
Bridging loans typically involve a high amount of risk for the lender, and interest rates on these loans reflect this fact. Generally speaking, the higher the risk for the lender, the higher the interest rate will be.
Consequently, borrowers who are viewed as being more risky – such as those with a poor credit history may be charged a higher interest rate than other borrowers.
Other factors that can influence the interest rate on a bridging loan include market conditions, such as the prevailing base rates and the availability of funds, the loan amount, the length of the loan and, in some cases, the purpose of the loan.
In order to get the most competitive interest rate on a bridging loan, borrowers should take the time to compare their options and shop around. They should also consider ways to reduce their perceived risk to lenders, such as providing additional security or demonstrating a reliable source of income.
Ultimately, the interest rate that borrowers pay on a bridging loan will depend on several factors and can vary widely between lenders. As such, it is important to do one’s research and compare their options before taking out a loan. By doing so, borrowers can ensure that they get the best rate available and avoid costly mistakes.
Types of Interest Rates
There are two types of interest rates commonly used for bridging loans: fixed and variable. Fixed interest rates remain the same over the duration of the loan, while variable interest rates can fluctuate.
Fixed Interest Rate
As the name suggests, fixed interest rates remain fixed over the duration of the loan. This means that the borrower will know exactly how much interest they will pay over the term of their bridging loan, and they can plan accordingly. The advantage of a fixed interest rate is that it allows the borrower to have more certainty with their budgeting.
Variable Interest Rate
Variable interest rates can fluctuate over the loan term. This means that the borrower could potentially end up paying more or less interest than anticipated. The advantage of a variable interest rate is that it can help the borrower take advantage of lower interest rates should they become available.
Factors Affecting Bridging Loans Interest Rates
The interest rate for a bridging loan typically depends on a number of factors, including:
Credit History
A good credit history increases a borrower’s chances of being approved and receiving a lower interest rate.
The Size of the Loan
The size of the loan influences the rate offered, as larger loans typically have a higher interest rate associated with them.
The Type of Security
The type of security used to secure the loan affects the rate. For example, if a property is used to secure the loan, the interest rate may be lower than if something else is used to secure the loan.
The Loan Term
The loan term will also affect the interest rate, as the shorter the term, the higher the rate will typically be.
The Current Economic Climate
History has shown us that the global economic conditions, such as inflation, can affect the interest rate offered on a bridging loan.
Final thoughts
The interest rate is a key factor to consider when taking out a bridging loan. The interest rate will typically depend on a number of factors, including the borrower’s credit history, the size of the loan, the type of security used, the loan term, and the current economic climate.
The interest rate on a bridging loan can be fixed or variable, and understanding the type of interest rate offered is important for recognising the potential risks associated with the loan.
