Bridging Loan Rates
One of the most important factors to think about when you take out short term finance are the bridging loan rates. The market has changed considerably over the last few years and with so much competition it is possible to arrange a bridging loan with great rates.
Bridging loans are tools to be used for a variety of purposes in business, so knowing the cost is vitally important. If you are a property developer, for example, your profit comes after any finance costs, so knowing the interest rate and also the other fees is a crucial step to deciding which short term loan to pick.
Bridging Loan Interest Rates UK
It is no secret that bridging is more expensive than a standard mortgage but there are clear reasons for that.
Most obviously is they are much faster to put in place than a normal mortgage and so you pay for the convenience of having available money within weeks, days or even hours.
Bridging loan interest rates
Buying property is a very common use for bridging finance.
And, these loans are taken out with the expectation of paying them back quickly, sometimes within days or more often around 6 months or so.
The source of funding for most lenders is higher than the cost of money for high street banks. A bridging lender is charging a margin, just like any financial institution that lends, it’s just that the starting rate is that much higher.
Low Bridging Loan Rates
Depending on the circumstances, such as the amount required and property location, the actual rate you can get will vary. At the time of writing the lowest rates are under 0.5% per month. These low rates will have quite restrictive criteria but, at just 6% per annum, it is probably less expensive a starting point than some might expect.
More common and realistic expectations are rates around the 1% mark, with some lenders charging 1.5-2% per month, depending on the detail of the application.
It is important to keep in mind that you need to look at fees, too. Loans like this will always have an arrangement fee and many also have an exit fee.
Although it is more expensive that is not putting borrowers off. While the banks are still difficult and tedious to deal with, borrowers are realising that short term funding is a great way to raise money and achieve their goals.
Of course, with the costs associated with these loans and the fact that you would only have the facility for a short period of time, say 6 – 12 months, you do need to be sure that you are able to clear the loan as agreed.
Whether you are going to auction to buy a property or need to raise money to clear an expensive bill or other business commitment, Volo FS is your route to fast finance. We will do everything we can to make sure you get the right loan for you and that it is as quick and painless as possible.
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