If you’re considering taking out a bridging loan, you’ll need to know how to calculate your costs. With our bridging loan rate calculator, you can get a clearer overview of your finances.

A bridging loan typically lasts for a maximum period of twelve to eighteen months. Borrowers may pay their interest in a few different ways.

One option is to pay monthly. The borrower pays the interest separately rather than adding it onto the balance of the loan.

Another option is rolling up the interest so it all becomes due when the borrower finally repays their loan.

The final option is a retained interest plan, also known as rolled up interest. This involves covering the interest payments for each month until a previously agreed date. The borrower then pays back the entire amount once the money becomes due.

There are further costs of a bridging loan that are worth exploring.

Typically, borrowers pay higher prices for a bridging loan as it’s a short-term finance option. Therefore, lenders set a bridging loan rate of interest that is typically higher than that on other finance products.

Typically, bridging loans have a monthly rate of interest of approximately 0.5-1%. Furthermore, other fees are added on. These include a bridging loan arrangement fee of around 2% to cover the costs of administration. There may also be a valuation fee and exit fee to bear in mind. As well as those, there may also be the cost of using solicitors in some cases to add on.

We have more details of the full cost of bridging loan on another article.

Bridging loans are popular with property developers, homeowners, and landlords as well as investors, business owners, and entrepreneurs. People take out bridging loans to purchase properties both at auction and on the open market. They’re open to people who have both good credit and those with a background of adverse credit.

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