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You are here: Home / Bridging Loans / How Much Does Bridging Finance Cost

by Payam Azadi

How Much Does Bridging Finance Cost

Finance for tax bills

I want the cheapest bridging finance but am not sure how it all works with the rates and other costs.

  • Free Quote
  • No upfront broker fees
  • Broker fees of £499 inc VAT for standard cases paid on completion of the deal
  • Auction, Bridging and Development Finance in one place.
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  • A hand picked panel of reputable Bridging Loan lenders
  • Loans from £50,000 to £20,000,000
  • Residential, Buy to Let and Commercial Finance Exit routes
  • First Time Buyers Auction Finance
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  • Light Refurbishment products offered for “flipping”
  • Bridge to Let Product to give landlords certainly and comfort
  • Complex Income structure
  • Lending on the end value
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Bridging Interest Rates

The interest rates on bridging finance are charged on a ‘monthly’ basis rather than an ‘annual’ basis that is associated with most credit. The bridging rates typically range from 0.75% to 1.45% for residential bridges, and 1% to 1.95% on buy-to-lets or houses in multiple occupation (HMOS). So in annual terms the equivalent would be at least 9%.

Furthermore, there is not a strict pattern to acceptance unlike a mortgages offered by a building society as the rates are not taken ‘off the shelf’, they are instead by agreement and negotiation. The negotiation element should be handled by a professional broker on your behalf otherwise the rates will almost certainly be higher and could change at a critical point such as exchange or completion if the lender believes they can exploit the situation.

By definition Bridging Finance is a short term loan and the lenders will therefore look to maximize their return. It is the same concept as ‘Pay Day Loans’ but obviously not to the same extremity on price.

You are paying for a ‘quick win’ and if you plan to borrow the money for longer than 9 months I suggest you talk to us about alternative solutions.

What Are The Other Costs Associated With Setting Up Bridging Finance?

The lender normally charges a ‘facility fee’, typically a percentage of loan, ranging between: 1.5% and 3%; and a admin fee of up to £500.

They will also ask you to cover their legal representation, typically £350 to £800 excluding vat and disbursements (stamp duty and searches).

You will also need to demonstrate the value of the property(s) that they are to lend against. This is nearly always achieved by paying for the services of a surveyor, who although ’independent’, will have the lenders interests at heart as that’s the hand that feeds them. The survey may need to include ‘a fire sale price’ and confirm likely rental income in the case of a buy-to-let and HMO. Surveys normally start around £300 for small properties and about £900 for properties worth circa £1m.

How much do Professional Brokers charge?

Professional bridging finance brokers typically charge between 0.5% to 2% of the loan size depending on complexity of the deal. The more reputable brokers, such as Niche Advice, do not charge upfront fees as this demonstrates they will add value and can help. Good negotiation and positioning of the application will make this worthwhile and affectively self financing.

Summary Of Bridging Finance Costs

TYPICAL COSTSMAIN RESIDENCYBUY-TO-LET or HOUSES IN MULTIPLE OCCUPANCY (HMOs)
Rates0.75% to 1.45% per calendar month1% to 1.95% per calendar month
Lender Facility Fee1.5% to 3% of the loan size1.5% to 3% of the loan size
Lender Admin Fee£0 to £350£0 to £500
Survey FeeStarts from £300 and rises in increments dependent on the property size. Typically £100 more for every  £100,000 in value.Starts from £450 and rises in increments dependent on the property size. Typically £100 more for every  £100,000 in value.
Broker Fees0.5% to 1.5% of the loan size0.5% to 2% of the loan size

Also check out Bridging Loan – 2020 Commonly Asked Questions https://www.nicheadvice.co.uk/bridging-loan-2020-commonly-asked-questions/

For more information on how we can help with your Bridging Finance requirements, please contact us on 0207 993 2044 or alternatively complete the simple enquiry form.

GET A FREE BRIDGING LOAN QUOTE
Payam Azadi

Author: Payam Azadi

Payam Azadi is a partner at Niche Advice who are whole of the market Independent Mortgage Brokers. His role is very much focused on Property financing both on residential and commercial lines. To get in contact with him please click here.
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AS A MORTGAGE IS SECURED AGAINST YOUR HOME OR PROPERTY, IT COULD BE REPOSSESSED IF YOU DO NOT KEEP UP THE MORTGAGE REPAYMENTS.

If you are thinking of consolidating existing borrowing you should be aware that you may be extending the terms of the debt and increasing the total amount you repay.

Niche Advice Limited is a Credit Broker and does not lend money directly to clients. Niche Advice Limited is authorised and regulated by the Financial Conduct Authority. FCA Number: 750263.

Commercial Buy-to-Let and commercial mortgages are not regulated by the Financial Conduct Authority.

Our Fees

Click here for our fees structure. A full detailed fee plan will accompany all our quotes.

Niche Advice Limited has a commercial arrangement under an affiliate programme with Check My File and is remunerated for referrals.

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If you wish to register a complaint, please write to us on the details below or call us on: 020 7993 2044.

Correspondence Address: Niche, Unit F6, The Addington Business Centre, Vulcan Way, New Addington, Surrey CR0 9UG.

A summary of our internal complaints handling procedures for the reasonable and prompt handling of complaints is available on request and if you cannot settle your complaint with us, you may be entitled to refer it to the Financial Ombudsman Service at www.financial-ombudsman.org.uk or by contacting them on 0800 0234567.

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Registered Office: Niche, Unit F3, The Addington Business Centre, Vulcan Way, New Addington, Surrey CR0 9UG. Registered in England & Wales. Company registration number: 06599033.

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