Natwest is one of the UK’s major banks, established in 1968 and now part of the Royal Bank of Scotland Group.
Due to their long history and brand awareness, many people seek the reassurance of using a high street bank like Natwest for bridging finance.
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- Loans from £20,000 to £30m plus
- Max 75% LTV first charge 70% second charge
- Secured on Residential and Commercial property
- Adverse credit considered
- Both Regulated and Non-Regulated Bridging Loans
Natwest Bridging Loans: Overview
While we are regularly asked if Natwest offer bridging loans, they haven’t for some years now. In fact, few of the current high street banks still operate in the bridging finance market, this has largely become the province of alternative lenders.
If you are particularly keen on arranging business finance through Natwest, they do operate the alternative lending platform Esme Loans. Esme is aimed at SMEs and has now lent over £50 million to British businesses.
What do NatWest’s Bridging Loan Interest Rates Look Like?
Across the broader UK market for bridging finance, interest rates for these types of loans generally range from 0.5% to 1.5% per month. These rates are notably higher than those for more conventional mortgage loans, which is primarily due to the short-term and high-risk nature of bridging finance.
Rates for bridging loans are typically influenced by multiple factors, including the loan amount, loan-to-value (LTV) ratio, and the borrower’s credit profile.
In addition to the headline interest rate, borrowers should be aware of other associated costs. Arrangement fees, and potential exit fees, contribute to the overall financial commitment associated with a bridging loan. These supplementary costs should be taken into account when determining the full financial implications.
Because interest rates can fluctuate based on economic conditions and the Bank of England’s monetary policy, it is prudent to consult directly with financial institutions for current and personalised information. Additionally, a thorough discussion with a financial adviser is advisable to gain a comprehensive understanding of the financial landscape and to devise a tailored plan.
Eligibility Criteria for a NatWest Bridging Loan
Firstly, a crucial eligibility factor is the borrower’s creditworthiness. Lenders usually conduct a thorough credit check and may require a satisfactory credit score. However, it’s worth noting that some lenders may be willing to consider cases with less-than-perfect credit histories, albeit often at higher interest rates.
A significant consideration is also the Loan-to-Value (LTV) ratio. Lenders typically offer varying LTV ratios based on the strength of the application, the nature of the collateral, and the loan amount. Generally, a lower LTV ratio is viewed more favorably, as it reduces the lender’s risk.
Additionally, the intended use of the loan is a key eligibility criterion. Bridging loans are generally used for specific short-term needs such as property purchases, auction acquisitions, or business cash flow requirements. Thus, the clarity and viability of the purpose are important for approval.
Other requirements may include proof of income or revenue streams, especially to demonstrate the ability to meet monthly interest payments and to repay the loan principal at the end of the term. Financial statements, bank statements, and business plans may be among the documents required for the application process.
Finally, some lenders may also require a clearly defined exit strategy. This outlines how the loan will be repaid at the end of the term, whether through the sale of assets, refinance options, or other means.
How Much Does a Natwest Bridging Loan Cost?
The chief costs of bridging loans are as follows:
- Arrangement Fee – 2% of any loan is standard, although some brokers will reduce this to 1% for larger loan amounts.
- Valuation Fee – These vary depending on the location of the property, its size and complexity, and whether the valuation is in depth and on site or merely cursory.
- Exit Fees – Approximately 1% is standard
- Interest – This can be either monthly, retained or rolled up. Between 0.5% to about 1.5% is a standard range.
Are Bridging Loans a Good Idea?
Short term finance is expensive, leading many people to question whether a bridging loan is a good idea. The simple answer to this is yes, it is a good idea if you’re aware of the fees and risks and the finance can help you secure your goals. In most cases bridging works exactly as it is supposed to, meaning the borrower successfully exits the finance according to plan and within budget
How Does a Bridging Loan Work?
If you’re in need of a bridging loan, you approach a lender (or we could offer you a range of quotes) with your proposition. You’ll need to know how much you wish to borrow, over what timeframe, for what property, and with security to act as collateral.
The lender considers your request and, if terms are acceptable, offers you a quote. Once agreed, the funds can be mobilised extremely fast: one of the USP’s of this type of lending is its speed.
Do NatWest do Secured Loans?
Natwest do offer secured loans, often under the terminology ‘Homeowner loan.’ They claim to be able to make decisions within a single working day, with rates varying dependent on how much you want to borrow, and the level of your security.
Most Natwest secured loans are used for home improvements, and are capped at a maximum of 50k.
Is There an Alternative to a Bridging Loan?
The common alternatives to bridging finance are either a buy to let mortgage, or by releasing funds tied up in existing assets using a process known as asset refinancing.
Even invoice finance can be used, in some cases, as an alternative to bridging loans.
Also worth considering might be commercial loans, secured loans, or development finance.
Top Alternatives to Natwest for Bridging Finance
Here at Business Expert our remit is to get the best deal possible. With whole of market access to almost every lender on the UK market (and some outside it) we pride ourselves on offering fast, competitve information at the click of a button.
So if you’re after a bridging loan, just fill in our simple form and receive a range of quotes.