Bridging Loan Calculator

Why use Brickflow’s Bridging Loan Calculator?

Brickflow’s bridging loan calculator is more than a quick estimate of loan costs; it’s a comprehensive search of the lending market that delivers live and accurate loan options for your project.

Our free bridging loan calculator enables you to:

• SEARCH & COMPARE loans from over 40 bridging lenders instantly
• FIND OUT how much you can borrow and how much it will cost
• MODEL YOUR DEALS and accurately project profits
• SECURE the best value bridging loan quickly, saving you money & time

It takes seconds to enter the details of your property/ site and perform a market-wide search across mainstream banks, challenger banks and specialist lenders. Unlike other bridging loan calculators in the UK – where you have to input vague values for lender rates and fees –  Brickflow gives you the important information, including:

• Maximum Loan to Value (LTV) ratios for your project (e.g. land loan and build costs)
• Monthly and annual interest charges
• Arrangement and exit fees
• True monthly costs ((Interest Rate / 12) + (arrangement fee + exit fee) / number of months
• Deposit requirements

Bridging Loan Criteria

As with all specialist finance, every lender will have different eligibility criteria and lending parameters, but the bridging market has grown substantially in recent years and covers a vast array of borrowing requirements.

There are some basic requirements for applicants, these include:

• Age: Are 18 or over; some lenders may have an upper age limit
• Residency: Is a UK resident or UK national living abroad (for unregulated bridging loans, there are limited options for non-UK nationals)
• Employment status: Is employed, self-employed or retired and available to an individual, Limited Company, LLP or partnership
• Experience: Completing similar projects (where value add work is to be carried out), though not essential, can help bolster an application
• Loan-term: Typically, the longest bridging loan term is 24 months, with most lenders offering 12 or 18 months. Where significant build works are involved and the work is unlikely to be completed in 24 months,  development finance would most likely be more appropriate.

Then it comes down to the finances:

• Security: Bridging loans are secured against the property. Lenders also want to see background assets, so if something goes wrong you should have the means to finish the project / repay the loan
• Minimum loan: Bridging loans are available from £25,000 (up to £60 million), but lenders are more likely to engage in applications for £150,000+
• Loan to Value (LTV) ratios: Most UK bridging lenders are limited to 75% LTV on a gross loan basis (lender interest and fees are deducted from this sum). Where a bridging loan is being used to carry out development/ refurbishment work, lenders can offer 100% of the build costs and up to 75% of the land/site costs
• Credit history: Good credit history isn’t always crucial to secure a bridging loan because the lender’s key focus is a solid exit strategy – however, lenders will still take it into account, and it can lead to better rates or leverage in some cases
• Income: Like credit history, income is not the lender’s main concern unless the borrower is servicing the loan monthly
• Regulated vs. unregulated: Criteria differ depending on whether the property is for personal use (regulated) because it has to meet certain regulations set out by the Financial Conduct Authority to protect borrowers

The above is important, but the key bridging loan consideration of lenders is your exit strategy. Lenders want to know how they will be repaid, so demonstrating a clear plan to either sell or refinance the property is essential.

The stronger your exit strategy, for example, when there is an agreed completion date for a property sale, the better your chances of approval or better rates.

True Cost of a Bridging Loan

Using the Brickflow bridging calculator is the easiest way to understand the true cost of a bridging loan, as we cover the main interest charges and fees. Additional costs to consider throughout the process of securing a loan include:

Interest charges

What interest rate you pay is determined by a number of factors, including: 

• The LTV of the property
• Property type and condition
• Your planned project
• Your exit strategy
• Your strength as a borrower include experience, creditworthiness and net asset value

Interest should  be calculated on a daily basis, so you only pay interest for the duration of your loan. Some lenders do still charge on a monthly basis, so you could be charged additional interest. Make sure you ask your lender and / or broker to confirm this point.

Most lenders offer and prefer rolled-up interest (paid at the end of the loan) so there are no monthly payments involved. 

Your final redemption payment (to pay off the loan) will include the original amount of capital borrowed plus the accrued interest and lender fees (normally their arrangement fee, which is calculated as a % of the gross loan amount - up to 2% is standard).

Additional bridging loan costs

• Arrangement fees: Up to 2% of the gross or net loan
• Exit fees: Exit fees are not very common in bridging finance, but they do exist. Almost none of the bridging lenders on Brickflow charge exit fees, however there are minimum interest charging periods - e.g. 1 month / 3 months / 6 months; i.e. regardless of when you redeem the lender has to receive at least the interest equivalent to the minimum term
• Legal fees: You’ll have to pay your own legal fees as well as the lenders
• Broker fees: Typically paid by the lender
• Valuation or survey fees: The lender should provide quotes from a few firms and let you choose
  

Bridging Loan Example: How a Bridging Loan Works?

To better understand bridging loan costs and they work, take a look at the example below. 

In this particular example, a developer is looking to purchase a property with refurbishment bridging finance over 12 months:

• Purchase price: £200,000
• Purchase costs: £10,000 (usually 5% of the purchase price)
• Costs of works: £50,000
• Gross development value (GDV): £340,000

The lender offering the largest loan with the lowest true monthly costs has an interest rate of 10.08% annually and a 2% arrangement fee, equalling an estimated total lender cost of £23,491.