What is a Cheap Bridging Loan?
Well what is a cheap bridging loan that is really difficult to define as most people would just look at the interest rates that are on offer but that is only half the story, by definition cheap bridging loans have always been considered expensive when compared with traditional forms of finance rates used to be as much as 18% pa however that has all changed, after the financial crash of 2008 many more lenders entered the bridging loan market offering bridging loans this influx of lenders resulted in ever more pressure on interest rates for loans and rates began to fall dramatically due to ever-increasing competition.
However a bridging loan is not just about the interest rates that are charged but also to do with achieving your objectives bridging loans are more than likely used in a distressed situation such as an urgent need for cash, or to buy a property quickly which adds financial rewards that are over and above the actual interest rates on offer, so in order to judge what is a cheap bridging loan you need to look further than this and take into account the financial benefits of actually taking a bridging loan, if it releases capital from a property when you have no other finance available to you then how cheap the loan is more about the overall picture and not just the cheapest rates. Likewise, if the loan allows you to secure a property that you would not have been able to secure without bridging finance then likewise the bigger pictures needs to be taken into account. Also often bridging loans are used when a part of a property chain has fallen through in this instance the overall cost can be far less than if the whole chain collapsed and you intended purchase was put in jeopardy.
So really to put it into context, you have to really look at the whole picture of what the benefits are to you against the overall cost of taking out a bridging loan whether the loan is cheap or not totally depends on your circumstances at the point of taking out the loan only when this is done can you determine if the bridging loan on offer is cheap or not.
What are the cheapest interest rates can I get on a bridging loan Quote?
Interest rates on bridging loans are not cheap when compared to the rates offered on mortgages or personal loans however people turn to a bridging loan when these financial products are not available to them so the whole transaction needs to be put into perspective which each lenders individual circumstance evaluated and the overall outcome is ascertained. What can be seen as cheap out the outset can prove to be far less cheap when all of the contributing factors are fully taken into account. Rate can start as low as 4 % per month for a low loan to value loan on a residential property in a good location and rise to as much as 9 percent per month for the least attractive loans however with so many lenders in the market we can usually source a loan for all but the worst of circumstances.
So what is a cheap bridging loan basically if after taking into account all of your costs you come out with a financial profit on the deal or you get a property that you would otherwise have failed to do so then it would be considered a cheap bridging loan, likewise if you were able to raise capital that otherwise would not have been available to you through other financial products you would have a net benefit that benefit has to be weighed against the costs of the loan on offer to you.
What are the Arrangement Fees
With arrangement fees there is no such thing as a cheap one, simply because they are all the same all of the lenders in the UK charge a two percent arrangement fee and this is non negotiable, the fee is based on the loan amount that you require and will be deducted from the amount on drawdown, so you do not have to worry about paying this upfront, as such it will only ever become payable if and when you get your bridging loan.
What Are The valuation Fees?
With valuation fees, these are the fees you will pay to the lenders surveyor to carry out a valuation of the property you are offering to them as security for your loan and there are savings to be made here, ask the lender to get at least three quotes for the valuation and then see who is the cheapest, all valuers have P.I cover so there's little to choose from them regarding the service they offer, it is more a question of catching one has spare capacity at the point of you wanting the valuation.
Cheap Legal Fees for Bridging Finance
Bridging lenders will ask you to cover their legal fees, they usually use the same set of solicitors for their legal work and they will provide you with an estimate before you commit fully to the loan, note this will have to be paid before the lender starts work on processing your application and would normally be in the range of £500-£2000 although it does depend on the total value of the loan and any expected complications that could occur during the application process.
What can you do now?
We we can certainly find you a cheap bridging loan, but not only that because we specialise in bridging loans we have access to the very best rates in the UK form over 80 lenders, we will also go through each deal and fully explain which deal really would offer you a cheap loan, based on interest rate, fees and more importantly one that you will actually be able to get with the least amount of fuss and effort.
With over 20 years experience you can be assured of the very best help and advice from our team.
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