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.
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 for Bridging Finance
Assuming an average rate of 1.5%, you would pay £4500 per month in interest repayments.
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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
Some lenders charge exit fees, which are generally about 1%, or another £4500 in the example given.
Valuation Fees
Property Valuation fees are not covered by this example. An average property company might charge around £750 to value a £500,000 property.
Legal Fees
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.
