bridging loans explained - part 4 of 6
Bridging loans and development finance loans for builders, can also allow you to buy land or develop a commercial property while you wait for another type of funding. Bridging loans help many people finance property sales transactions that might otherwise be impossible for them to complete.
10) What Interest Rates Would I Be Charged?
Bridging loans
Interest rates on bridging loans are typically higher than on residential or commercial mortgages. This is a protective factor to safeguard lenders against issuing high-risk funding. These interest rates can vary significantly. They may start as low as 0.37 percent per month and go as high as 1.5 percent monthly. If you obtain bridge financing for the amount of £100,000, your monthly interest rate at 0.37 percent will equal £370. At a rate of 0.45 percent, it will equal £450, and at 65 percent, £650. If you should acquire a bridging loan with an interest rate equaling 1.50 percent, your monthly interest rate will be £1,500.
When you make monthly interest repayments, the amount of the payment is set. One advantage of fixed interest payments is that as you, the borrower, make interest payments each month, the amount due will begin to decrease. However, if you are a property developer and want to make improvements to increase your property’s value during the term of your loan, fixed interest payments may not be so desirable. In this case, retained or retained and rolled-up interest may be a better arrangement for you since repayment of the interest is deferred until the end of your loan term. You now have a good understanding of the question, “What interest rates would I be charged?”
11) Where Can I Access a Bridging Loan Calculator?
You can actually access a bridging loan calculator right on our website. It is simple to figure rates and percentages using this convenient on-site device. You can quickly determine the exact amount of various fees according to the charge rates. You can add and subtract fees and total a series of rate amounts with ease and accuracy. There is no need to reach for your smartphone or pocket calculator to determine fees and interest amounts. Simply use the calculating option provided on our site to obtain helpful figures quickly and efficiently.
However, if you need to make these calculations when you are not online, you may find using some other calculators complex or cumbersome. It can take longer to figure out how some of these devices operate than to calculate all of the figures needed. In addition, you may not be certain what rate to apply in order to obtain accurate figures that suit your specific needs. In this case, you can save yourself time and aggravation by consulting an experienced broker who can produce accurate figures quickly and easily. You broker can save you the trouble of wondering, “Where can I access a bridging loan calculator?”
12) How Much Bridging Finance Can I Get?
When applying for bridging finance, you can usually expect to obtain a maximum amount of from 60 to 70 percent of your property value. Lenders always base these asset loan amounts on your property building, developing or purchasing project’s LTV. This is the loan to value, which is the ratio that reveals the optimal amount of funds that you may borrow based on the value of the asset you are borrowing against.
You can use your current home, another house, an apartment or commercial building, a factory, a restaurant or simply a plot of land as collateral for your bridging loan. The amount of funding that you receive will be calculated based on the value of the asset that you choose to borrow against. If you own a property valued at £100,000 and you want a loan for £70,000, the LTV for your loan equals 70 percent. Now you can easily have an answer to the question, “How much bridging finance can I get?”
Bridging loans explained - part 5....>>
Don’t forget to read the other sections, for more information an help on understanding bridging loans and how they work.
If you need to understand how bridging loans work, or want help in securing a bridge finance loan, then get in touch.