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Bridging Loan

Bridging Loan Calculator

Get a detailed estimate on your bridging loan fee, terms, charges and interest.

  • Property Details
  • Type of loan
  • help The maximum LTV for this type of property is 75%
  • help We will lend against current market value of the asset with vacant possession

  • £500,000
    help You cannot exceed the maximum loan available based on the maximum LTV for the corresponding type of property selected above
  • 75%
    help You cannot exceed the maximum LTV available for the corresponding type of property selected above

  • 0
  • help Term should be entered in whole months, to a maximum of 12

  • help Deducted interest is where the forecast interest amount is deducted from the loan on day one.
  • help Serviced interest is where the interest is paid on a monthly basis. If serviced interest is chosen, evidence will be required to show your ability to pay interest when it is due.
  • For residential property in a single building, you have the option to increase and extend borrowing on completion of the work. Would you like to have this option?
    help If you choose this option, interest will be retained from the loan. If not, we can review any further lending requirements when the facility matures
  • help This is the standard rate for the property type chosen
  • help You can enter a custom rate below our standard rate for the calculation, but the availability of this rate is not guaranteed
Instant Results
Total security value 0
Gross loan amount 0
Gross LTV 0
Interest rate 0
Term (months) 0
Minimum term (months) 0
Assumed arrangement fee @ 2% (min £2,000) 0
Interest Retained 0
Monthly Serviced Interest 0
Admin fee 0
Indicative day 1 Net loan advance 0

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Are You Familiar with the Modern Bridging Loan?

While bridging loans have traditionally only ever been used to “bridge” the gap when one link in a property chain has broken down, the practice of using bridging finance for other purposes has become more common in recent years. This has come about due to a variety of different contributing factors.

For starters, people have grown weary of the lengthy processing times that it often takes traditional banks and building societies to handle applications. As a direct response, a plethora of specialist lenders have sprung up in the marketplace, with certain companies offering bespoke bridging finance services. With greater specialisation in the sector, there is now a far larger range in terms of product choice, with each different product offering its own unique terms and conditions. For buyers who need to complete a deal quickly, these kinds of services can prove to be very attractive indeed, meaning that bridging loans are now used for a wide variety of different purposes.

There's a number of reasons why a bridging loan may make sense for your particular situation. These can include:

Expediting the sale. The ability to quickly draw down funds can equip buyers with the ability to negotiate a more attractive purchase price and speed up the whole process, avoiding the holdups often incurred via traditional funding applications.
Maintaining a position in a property chain. If you find yourself unable to meet your obligations in a property chain (due to a buyer pulling out of a deal or being unable to find one in the first place), a bridging loan can help you to meet the shortfall and maintain your position in the chain.
Purchasing in a property auction. Most auction houses specify that the deal must be completed within 30 days of the auction itself. A bridging loan can provide the capital needed to complete the sale and take ownership of the property, either for residential or refurbishment purposes.
Acquiring a failing business. If the business in question does not possess satisfactory evidence of its future profitability to satisfy the criteria of a conventional business loan, bridging finance can be used to give the new owner the breathing space needed to turn things around and begin turning a profit, at which point the bridging loan can be refinanced into a conventional business mortgage.
Buying a property when funds are delayed. In situations where buyers are waiting on the funds to be released from a separate transaction, venture or source and a delay occurs, a bridging loan can be used to meet the temporary shortfall.
Development financing. Bridging loans can provide the capital necessary for short-term development projects, with the balance repaid after the development has been completed and the property remortgaged or sold. However, this scenario may benefit more from a conventional long-term financing option, should the circumstances permit it.
Development exit financing. In situations where the development project has been completed but not all of the units have yet been sold, a developer may look to use a bridging loan to pay off their development loan from the bank and free up cash to begin their next project.

In addition to the above scenarios, there are also a number of slightly less conventional purposes to which bridging loans are being put nowadays. These include:

Solving a short-term cash flow problem. If invoice payments are delayed or trade receipts are yet to be realised, a short-term bridging loan can help to meet the temporary shortfall in cash flow.
Paying Inheritance Tax. After a bereavement, it's possible that the payment of Inheritance Tax will be due before the assets of the estate have been liquidated and the funds released. In these circumstances, a bridging loan can pay off the Tax before the beneficiary receives their equity.
Buying a property below market value. Banks and other conventional mortgage providers are often wary of funding the purchase of a property below its market value, even in situations where there are valid extenuating circumstances that justify the under-valuation. As long as a solicitor can provide evidence of those circumstances, a bridging loan can be used to fund the purchase and the ongoing mortgage repayments until such time (normally between six months and a year) as conventional providers are more comfortable with the situation.
Paying unforeseen tax obligations. An unexpectedly high tax bill or unforeseen pecuniary penalisation from HMRC could mean that a short-term injection of funds is needed to avoid further charges or legal ramifications. If you're able to pay off the loan within a reasonable time period, bridging finance could provide the answer.
Extending a lease. For leaseholders whose current lease is about to expire, a bridging loan can buy the time required for the paperwork necessary to extend the lease to be processed. As before, this would eventually be refinanced via a conventional mortgage after the fact.
Preventing repossession of a property. In order to avoid losing the equity in a property that is about to be repossessed, the owner may wish to refinance the property from their existing mortgage onto a bridging loan. All interest accrued during the period of the loan could simply be added to its final balance, meaning that no repayments are necessary while it is in place. Once the property is sold, the balance of the bridging loan can be repaid and any leftover equity retained by the owner.

One of the primary attractions of a modern bridging loan is the multitude of options that they offer with regard to specific fees and repayment terms. For example, both fees and interest accrued can be paid off during the period of the loan, meaning borrowers can access between 70% and 75% (and, on rare occasions, up to 80%) of the loan-to-value (LTV) ratio at the outset of the arrangement.

Alternatively, borrowers may wish to stipulate that all fees and interest accrued are to be added to the loan itself and become repayable at a specified date. In this case, the value of such expenses would be calculated at the outset and then subtracted from the overall LTV, resulting in a final LTV of around 60% to 65% accessible at the outset. In this way, less funds are available immediately, but no repayments take place until the loan expires.

Other aspects of bridging finance to consider

Early repayment charges. Bridging loans are generally taken out over a period of between one and 24 months. If the borrower wishes to pay off the balance earlier than the agreed timeframe, this is likely to incur early repayment charges. It's to best to seek professional advice to find a bridging finance provider which offers products most appropriate for your unique situation.
Front-loaded interest in case of early repayment. If the borrower chooses to have their interest front-loaded (calculated at the outset of the loan and repaid at the end), but then decides to pay off the net loan before the agreed-upon terms of the loan, any additional interest will be refunded on a pro-rata basis.
Flexibility of terms and conditions. When it comes to bridging loans, most providers operate on a case-by-case basis and each borrower's situation is assessed on its own circumstances, allowing for greater flexibility than with more conventional forms of financing.
Monthly interest. If the borrower chooses to pay off interest on a monthly basis, it's likely that the bridging finance provider will conduct an assessment to determine whether they have enough external income to meet those repayments.
Mortgage offer. Bridging finance providers can furnish borrowers with both a bridging loan cost offer letter and a term mortgage offer letter at the outset of the arrangement, offering the borrower peace of mind that they will be able to access a term mortgage upon repayment of the loan.

What is a Bridging Loan Calculator?

A bridging loan finance calculator helps you figure out how much a short-term loan will cost. It quickly calculates the bridging loan interest and valuation fees for bridging loans UK rates.

Uses and Benefits

A bridging loans calculator serves as a crucial tool for individuals and businesses looking to secure temporary financing while waiting for long-term funding to become available. This advanced calculator helps users quickly determine the potential interest rates and monthly interest payments on bridging loans UK wide.

With such precise estimates, borrowers can easily compare different lending options. They gain a clear understanding of how much they will need to repay, allowing them to select the most cost-effective choice.

Utilizing a bridging loan calculator brings about several benefits, including saving time and reducing the risk of unforeseen expenses. Instead of manually calculating complex figures, users input key details like loan amount, term length, and expected interest rate.

The calculator then does all the heavy lifting, presenting accurate financial insights in seconds. This efficiency is especially valuable in fast-paced real estate markets where swift decisions are often necessary.

Moreover, by providing clarity on bridging loans UK rates before making any commitments, these calculators empower borrowers with confidence in their financial decisions.

How to Use a Bridging Loan Finance Calculator

To start using a bridging loan calculator, simply input your financial information and watch as it does the math for you! This tool can show how much you might pay, encouraging smart financial moves.

Ready to see how it works? Keep reading to uncover the benefits of this calculator in making informed decisions.

Gathering Information

Gathering the right information is key to using a bridging loan calculator effectively. You need details about your current property value, the amount you hope to borrow, and the bridging loan rates offered by lenders.

This helps determine how much you can expect to pay monthly and the total cost of your loan. Ensure all figures are accurate for the most reliable results.

Collecting this data might involve talking to real estate agents, banks, or financial advisors. They can provide insights into current market values and possible future trends that could affect your calculations.

Armed with this knowledge, using a bridging loan calculator becomes a straightforward task that brings numerous benefits in planning your finances better.

Importance of Using a Bridging Loan Calculator

Using a Bridging Loan Calculator helps you get precise estimates that guide your financial decisions. It also aids in selecting the most suitable lender for your needs, ensuring you make informed choices.

Accurate Estimates

A bridging loan calculator provides precise cost estimates for your loan. It factors in interest rates and any additional charges, giving you a clear picture of what to expect financially.

This tool helps eliminate guesswork, offering a solid foundation for your financial decisions.

By using this calculator, borrowers gain insight into their potential monthly payments and overall costs associated with the bridge loan. Such accuracy is crucial for budget planning and ensuring that the chosen gross loan aligns with one's financial capabilities.

Better Financial Planning

Using a free bridging loan calculator makes financial planning more straightforward and effective. It helps you understand exactly how much you can borrow and what the repayments will look like over time.

This clarity allows for smarter budgeting decisions, ensuring that you’re not caught off guard by unexpected costs or shortfalls in funding. Knowing these details ahead of time helps in setting a realistic timeline for repayment, which is crucial for maintaining financial stability.

Smart use of this tool also supports strategic investment moves, especially if you're transitioning between properties or managing a short-term financial gap. You gain insights into how different loan terms and bridging loan interest rates impact your overall financial plan.

Armed with this knowledge, making informed choices about loans becomes easier, aligning closely with your long-term financial goals.

Next, we'll explore choosing the right lender to complement your well-laid plans.

Choosing the Right Lender

Selecting the right lender for a bridging loan can save you thousands in interest and fees. You must compare different lenders to find one that offers competitive rates, favorable terms, and excellent customer service as well as broker fees.

Look for lenders who provide transparent information about their loan products, legal fees and loan interest rates and who have a proven track record of reliable service.

Understanding each lender's requirements will help you prepare your application to meet their specific criteria. This step ensures a smoother approval process and could lead to better loan terms.

Once you've chosen the right lender, focus on finalizing your financial plan before moving forward with the loan application.

In summation

The crucial ingredient in assessing the validity of any bridging finance application is the borrower's ability to prove that they have a credible source of capital from which they can repay the loan. This could take the form of selling or liquidating the asset, remortgaging the loan onto a longer-term product or deriving funds from other external sources.

It should be remembered that an LTV of between 70% and 75% is always secured against the value of the property itself, and that bridging loans comprise a more expensive source of financing when compared to conventional mortgages. However, there are circumstances in which the long-term profitability of the property or project in question makes up for these additional costs, while the availability of up-front cash from a bridging loan can also be instrumental in securing a particular property, whether it be for residential or business purposes.

These features may make a modern bridging loan the ideal solution in certain transactions, but it's always advisable to discuss the terms of any deal with a qualified professional before committing to it.

So try out our Bridging Loan Calculator today to get an idea of what you can borrow on a Bridging Loan.

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

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FCA disclaimer

The content included in our articles, blogs, web pages and news publications is based on information accurate at the time of writing. Note that policies and criteria can change regularly throughout the UK mortgage lending market, and it remains essential to contact the consultation team to receive up to date guidance. The information included on the Revolution Brokers site is not bespoke to any circumstances or individual application scenarios and therefore is not intended to be used as financial advice. The content we share is designed to be informative and helpful but cannot be relied upon to provide individual advice relevant to your mortgage requirements. All Revolution team members are fully qualified, trained and experienced to provide mortgage advice of an independent nature.

We collaborate with lenders and providers who are regulated, authorised and registered with the Financial Conduct Authority (FCA). Should you require specific mortgage borrowing types, some products such as buy to let mortgages may not be FCA regulated. The Revolution team can provide further information about regulated and unregulated lending as required. Please remember that a mortgage is a debt which is secured against your home or property. Your home can be at risk of repossession if you do not keep up with the repayments or encounter any other difficulties in managing your mortgage borrowing responsibly. This also applies to any remortgage or home loan secured against your property, including equity release products.

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