Considering purchasing a property? Bridging loan calculator UK can be used to get an indicative quote. A bridging loan calculator estimates the costs involved in securing bridging loans. A loan plan is devised to do these calculations.
Bridging Loans
Bridging loans are also referred to as interim finance or bridging finance. They provide a short-term finance solution that offers capital for property purchase, renovation, and bridging a gap between finances until a long-term or permanent solution is available.
Bridging loans are secured against property and can be used for residential or commercial purposes. Bridging finance is flexible, and funds can be arranged quickly.
Purpose of Bridging Loans Calculator UK
A bridging loan calculator uk will determine whether bridging finance is worth pursuing. This calculator figures out monthly payments on bridging loans, LTV (Loan to Value), fees, interest only, and balloon repayments.
How to Use Bridging Loan Calculator
To use the bridging loan calculator UK, you need to provide the following details, and you can easily calculate your results instantly.
Some bridging lenders use complex bridging loans calculators UK and require additional information such as credit score, previous experience in property, income details, exit strategy, and age.
- Property Value – the property value has used security for the bridging loan.
- Loan Amount Required – This is the loan amount that a borrower needs. A net loan amount before adding any fees or interest rates.
- Outstanding Mortgage – This information is required if the mortgage is not going to be repaid by the bridging loan. If there is a mortgage outstanding that will be repaid in full, please leave the figure as ‘0’.
- Extra Costs and Fees – bridging loans are considered expensive because various fees are associated with them.
An arrangement fee, usually 2%, is charged by the lender for arranging the facility. This is calculated by a percentage.
There are other fees, e.g., valuation fees; the valuation should be completed before securing the loan. Other fees involve solicitor’s fees, bridging broker’s fees, etc.
- Exit Fee – Many lenders do not charge lending fees, but some charge a loan exit fee. Exit fee is calculated from a percentage.
- Loan to Value (LTV) - This is calculated by taking the loan amount plus any mortgages left in place as a percentage of the total value of the security properties.
Interest Rate – An interest is charged on a bridging loan. Bridging loans have higher interest rates than traditional mortgages and are charged at monthly rather than annual rates. The bridging loan calculator calculates based on a monthly loan interest rate. Typically, a monthly rate would sit between 0.39% and 1.5%. It is decided by the lender considering exit strategy and credit score.
Interest rates on bridging loans can be calculated in different ways. Different interest options are given to the borrowers, such as rolled-up or retained interest options. In this scenario, interest is added every month to the loan balance. When you pay off the loan, the redemption repayment includes the loan amount and accrued monthly interest.
Criteria for Bridging Loan
Loan terms usually depend on the type of loans used, whether regulated or unregulated.
- Regulated Bridging Loans
Regulated bridging loans are used for residential purposes. The
criteria for regulated bridging loans is as under:
|
Item |
Terms |
|
Type of bridging finance |
Regulated |
|
Max Loan To Value |
75% LTV Residential |
|
UK Areas covered |
England, Wales & Scotland |
|
Loan Term |
1-12 months |
|
Minimum Loan Size |
£50,000 |
|
Maximum Loan Size |
No maximum |
|
Minimum interest |
0.25% pm |
|
Interest treatment |
Rolled, Retained or Serviced |
|
Borrower residency |
UK residents, UK expats |
|
Borrower Type |
Individual, Sole Trader, LLP, Partnership, Ltd Company |
|
Security Types |
Residential (1st & 2nd Charge) |
|
Funding for: |
New builds; Refurbishment; Conversions; Grade listed buildings; Mixed schemes |
|
Planning Permission Needed |
Case By Case |
- Unregulated Bridging Loans
Unregulated bridging loans are used for commercial purposes. The criteria for unregulated bridging loans are as under:
|
Item |
Terms |
|
Type of bridging finance |
Unregulated |
|
Max Loan To Value |
80% LTV Residential & 70% Commercial |
|
UK Areas covered |
England, Wales, Scotland & Northern Ireland |
|
Europe |
From £1m - Germany, Spain, Netherlands, Switzerland, Austria, Monaco |
|
Loan Term |
1-24 months |
|
Minimum Loan Size |
£50,000 |
|
Maximum Loan Size |
No maximum |
|
Minimum interest |
0.44% pm |
|
Interest treatment |
Rolled, Retained, or Serviced |
|
Borrower residency |
UK residents, UK expats, Non- UK Nationals (Limited Options For UK Property) |
|
Borrower Type |
Individual, Sole Trader, LLP, Partnership, Ltd Company |
|
Security Types |
Residential, commercial & semi commercial property (1st & 2nd Charge) |
|
Funding for: |
New builds; Refurbishment; Conversions; Grade listed buildings; Mixed schemes |
|
Planning Permission Needed |
Case By Case |
The Takeaway
A bridging loan calculator UK functions in the same way as a standard mortgage works but it analysis the total costs of bridging and monthly interest. A bridging calculator provides as accurate as possible the estimated costs of securing the loan. Due to the fast processing time and flexibility, bridging finance is an ideal finance option.
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