Need a bridging loan example?
If you’re considering a bridging loan, it might be helpful to see an example of a typical finance deal, with a breakdown of the costs and charges.
A Typical Example is as Follows:
Assuming a bridging loan of £300,000 is required, here’s what you should expect to pay.
|Property Sale Price||£800,000|
|Total Amount of Bridging Finance||£300,000|
|Typical Monthly Interest (at 1.5%)||£4,500 pm|
|Typical Arrangement Fee||£4500|
|Typical Exit Fee||£4,500|
Typical Monthly Interest
Assuming an average rate of 1.5%, you would pay £4500 per month in interest repayments.
Meeting Payments with Retained Interest Bridging Loans
Some bridging loans facilitate borrowers making payments more easily by keeping the interest until the end. This means that a 12 month bridging loan for £300,000, using retained interest, you would pay £54,000 at the end of the loan term.
These type of loans are ideal for borrowers who have a clear exit strategy in mind but cash flow problems in the interim.
Example Bridging Loan Arrangement Fees
Using an average of 1%, arrangement fees for a 300k bridging loan could total another £4500
Exit Fees Example
Some lenders charge exit fees, which are generally about 1%, or another £4500 in the example given.
Valuation Fees Example
Property Valuation fees are not covered by this example. An average property company might charge around £750 to value a £500,000 property.
Typical Legal Fees for Bridging Finance
Again, these will vary widely depending on the type of legal firm you are using. You should expect a fee of at least £2000 for legal services provided in setting up a bridging loan.