Bridging Loan Rates

Wednesday 4th January 2023 | 4 minute read

"Bridging Loan Rates" are the interest rate (fixed or variable) of a bridging loan, typically between 0.44% and 2.00% per month.

Interest, along with the lender's arrangement fee and broker fee, is the primary cost of borrowing.

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Bridging loans are short-term finance that allows individuals and businesses. 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 borrowers pay when taking out a bridging loan can significantly impact the total cost of the loan. Interest rates on bridging loans are typically higher than other types of financing.

As a result, borrowers need to understand how much they’re paying in interest and what factors influence the rate they’re offered. 

This guide will explain the interest rate concerning bridging loans and how it affects the borrower. 

You can find our standard bridging loan and development finance rates below.

Please remember that our rates will be based on your circumstances and the merits of your specific requirements.

We search the whole 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
Up to 50% without planning
Up to 100% with additional security

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 bridge 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, usually expressed as a monthly percentage or a monthly rate (per month). It 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 term of the loan, such as the loan term, the amount borrowed, the creditworthiness of the borrower, and the type of security given to secure the loan. 

Bridging loans typically involve a high risk for the lender, and interest rates reflect this. Generally speaking, the higher the risk for the lender, the higher the interest rate.

Consequently, borrowers are viewed as being more risky – such as those with a poor credit history, who may be charged a higher interest rate than other borrowers for a non-status bridging loan

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. 

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, borrowers' interest rates on a bridging loan will depend on several factors and 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 they get the best rate available and avoid costly mistakes.

Types of Interest Rates

Two types of interest rates are 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 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 several 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 several factors, including the borrower’s credit history, the loan size, 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.

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