Bridging loans can be useful for landlords, developers and homeowners who need to get hold of money fast. But how do you go about finding the best bridging deals when time is of the essence?\r\n\r\nWe\u2019ve created this article to tell you everything you need to know about bridging loan interest rates in 2019.\r\n\r\nWe\u2019ll be covering the following topics:\r\n<ul>\r\n \t<li><a href="#how-much-borrow">How much can I borrow for a bridging loan?<\/a><\/li>\r\n \t<li><a href="#interest-bridging-loan">How much is the interest on a bridging loan?<\/a>\r\n<ul>\r\n \t<li><a href="#fees">What other fees will I need to pay?<\/a><\/li>\r\n<\/ul>\r\n<\/li>\r\n \t<li><a href="#deposit">What deposit will I need for a bridging loan?<\/a><\/li>\r\n \t<li><a href="#bridging-loan-deals">How can I compare bridging loan deals?\u00a0<\/a><\/li>\r\n \t<li><a href="#best-interest-rates">How can I get the best bridging finance interest rates?<\/a><\/li>\r\n \t<li><a href="#bridging-for-ltd-company">Are bridging finance rates different for ltd company borrowers?<\/a><\/li>\r\n \t<li><a href="#london-bridging">Are bridging loan rates any different in London?<\/a><\/li>\r\n \t<li><a href="#property-type">How can property type impact bridging loan rates?<\/a><\/li>\r\n \t<li><a href="#alternatives">What are the alternatives to bridging loans?<\/a><\/li>\r\n \t<li><a href="#speak-to-expert">Speak to a bridging finance expert<\/a><\/li>\r\n<\/ul>\r\nFor the best advice and bridging finance deals, speak with an expert.\r\n\r\n[feefo-banner]\r\n<h2 id="how-much-borrow">How much can I borrow for a bridging loan?<\/h2>\r\nThis will depend on your circumstances. Bridging loans are designed to bridge the gap between a debt and a mainline of credit becoming available. While some lenders will refuse to loan less than \u00a3150,000, some will lend \u00a350,000, others \u00a330,000 and a minority will go as low as \u00a310,000.\r\n\r\nHowever, because bridging is flexible, there\u2019s always a chance you can find a lender who will hand over less under the right circumstances.\r\n<h3>Do bridging lenders look at my income?<\/h3>\r\nThe important thing to remember is, unlike main residential mortgages or <a href="https:\/\/www.onlinemortgageadvisor.co.uk\/buy-to-let-mortgages\/">buy-to-let mortgages<\/a>, this is not about your personal income or the projected rental income.\r\n\r\nIf you have enough equity in another property or asset along with a good exit strategy, the money can often be borrowed.\r\n<h3>What\u2019s the most I could borrow?<\/h3>\r\nMost bridging lenders are flexible enough to impose <a href="https:\/\/www.onlinemortgageadvisor.co.uk\/bridging-finance\/large-bridging-loans\/">no strict cap on the maximum<\/a> they\u2019re able to hand out and deals worth tens of millions and upwards are not unheard of.\r\n\r\nThe most important factor is the exit strategy, and if yours is watertight, i.e. guaranteed to pay out the necessary amount within the required timeframe, there\u2019s a chance the provider will consider lending regardless of the amount (within reason, of course).\r\n<h2 id="interest-bridging-loan">How much is the interest on a bridging loan?<\/h2>\r\nInterest rates on bridging loans tend to be higher than other forms of borrowing, such as mortgages. Since bridging loans are offered on a short-term, <a href="https:\/\/www.onlinemortgageadvisor.co.uk\/interest-only-mortgages\/">interest-only<\/a> basis, they are usually expressed as a rate per month rather than per year, ranging from 0.4% to 2%. For example, a bridging loan of 1.5% a month actually translates to 18% APR.\r\n\r\nSimilar to mortgages, bridge loan rates can be fixed or variable.\r\n\r\n<a href="\/fixed-rate-mortgages\/">Fixed rates<\/a> will be static for the duration of the term, while variable rates can fluctuate, so the amount you have to pay could go up or down.\r\n\r\nThe way interest is charged for bridging finance can also vary:\r\n<ul>\r\n \t<li><strong>Monthly<\/strong>:\r\nThe borrower settles the interest each month and only pays off the balance of the loan amount at the end of the term.<\/li>\r\n \t<li><strong>Deferred\/rolled up<\/strong>:\r\nAll of the interest and the final loan amount is due at the end as a lump sum. The interest is compounded during the term.<\/li>\r\n \t<li><strong>Retained<\/strong>:\r\nYou \u2018borrow\u2019 the interest for a specific period and the amount due is calculated at the beginning based on the length of the term and settled up later.<\/li>\r\n<\/ul>\r\n<h3 id="fees">What other fees will I need to pay?<\/h3>\r\nInterest isn\u2019t the only thing you\u2019ll have to pay if you take out this type of finance.\r\n\r\nThese loans tend to come with high administration fees, including arrangement charges and exit costs.\r\n\r\nYou should always establish how much these additional costs will amount to and establish the overall cost before pressing ahead, because it all adds up. If you borrow \u00a3100,000, for instance, a 1% arrangement fee and a 1% exit cost would add \u00a32,000 to the overall amount.\r\n\r\nMake an enquiry and we\u2019ll match you with an expert who can discuss this with you in more detail.\r\n<h2 id="deposit">What deposit will I need for a bridging loan?<\/h2>\r\nThe loan to value (LTV) ratio for most bridging lenders is 75% of the gross loan, but some set it as low as 50-60%. Others may consider going higher (<a href="https:\/\/www.onlinemortgageadvisor.co.uk\/bridging-finance\/100-bridging-loans\/">up to 100%<\/a>) if you\u2019re able to put up additional assets\/properties as security. Most providers are happy with multiple securities but may charge you additional valuation fees in these circumstances.\r\n\r\nIf you\u2019re buying property with a bridging loan, a <a href="https:\/\/www.onlinemortgageadvisor.co.uk\/bridging-finance\/#deposit-needed-for-bridging">deposit of at least 30-35%<\/a> of its value is typically required, based on LTV including the rolled-up\/retained interest.\r\n\r\nIf you\u2019re looking for the best bridging loan provider for someone in your circumstances, get in touch and the advisors we work with will conduct a market-spanning search to find them.\r\n<h2 id="bridging-loan-deals">How can I compare bridging loan deals?<\/h2>\r\nComparing bridging loan products in search of the <a href="https:\/\/www.onlinemortgageadvisor.co.uk\/bridging-finance\/cheapest-bridging-loans\/">best deal<\/a> can be difficult. The market for bridging finance is vast and every deal is different and assessed and handed out on a case-by-case basis.\r\n\r\nComparison tables are far from definitive as they only provide a rough benchmark of the rates on offer and sometimes give prominent placement to sponsored products.\r\n\r\nThe best and most reliable way to compare bridging loans is to have a specialist whole-of-market broker do the legwork for you.\r\n\r\nThe experts we work with will search the entire market for the lender best positioned to offer a favourable deal to a borrower with your needs and circumstances. Make an enquiry to speak to someone who can get you the best available deal.\r\n<h2 id="best-interest-rates">How can I get the best bridging finance interest rates?<\/h2>\r\nBridging loan interest rates and fees can fluctuate and shift at any time.\r\n\r\nThe key to finding the best bridging loans with the best rates around is having access to the whole of the market, and meeting the eligibility criteria at as many lenders as possible.\r\n\r\nRead on to find out which factors bridging lenders take into account when assessing eligibility, or make an enquiry to talk to a <a href="https:\/\/www.onlinemortgageadvisor.co.uk\/bridging-finance\/bridging-loan-broker\/">bridging loan broker<\/a> over the phone.\r\n<h3>How bridging lenders determine eligibility<\/h3>\r\nThe key to landing the best bridging loan deals and getting the best bridging loan rates is meeting the eligibility criteria with as many lenders as possible.\r\n\r\nBridging finance providers judge every application on a case-by-case basis, but tend to reserve their best rates for borrowers with the following:\r\n<h3>A strong exit strategy<\/h3>\r\nAs bridge loans are offered on a short term interest-only basis with high rates, the exit strategy is of paramount importance and is often the deciding factor in lending decisions.\r\n\r\nIn the vast majority of cases where the property is involved, the exit strategy is a <a href="https:\/\/www.onlinemortgageadvisor.co.uk\/remortgages\/remortgage-guide\/">remortgage<\/a> or the sale of the property, so the rates you\u2019re offered may depend on the value of the property and how sellable it is, or how much you\u2019re likely to be able to remortgage for.\r\n\r\nIf the investment is sound and likely to generate enough capital to bankroll the exit, you will stand a good chance of securing the best value bridging loans.\r\n\r\nBear in mind that some providers may be willing to accept <a href="https:\/\/www.onlinemortgageadvisor.co.uk\/interest-only-mortgages\/interest-only-repayment-vehicles\/">\u2018non-standard\u2019 exit strategies<\/a> such as using investments, endowments or inheritance to repay the loan, but may charge interest daily in these cases.\r\n<h3>Clean credit<\/h3>\r\nCurrent bridge loan interest rates may seem high compared to more traditional types of borrowing, but that doesn\u2019t mean finding a favourable deal is impossible.\r\n\r\nWith a clean credit rating, you\u2019ll stand a better chance of ending up on the best rates. <a href="https:\/\/www.onlinemortgageadvisor.co.uk\/bridging-finance\/bad-credit-bridging-finance\/">Borrowers with bad credit<\/a> are too high risk for some lenders, especially if their exit strategy is a remortgage and there\u2019s a possibility of further adverse credit during the loan term.\r\n\r\nBad credit will also shrink your chances of qualifying for a second charge bridging loan, but generally speaking, it doesn\u2019t rule you out of bridging finance agreements altogether.\r\n\r\nIf you\u2019re seeking bridging finance with any of the above and want a great deal, make an enquiry and we\u2019ll match you with one of the advisors we work with who can help you find a bridging lender.\r\n<h3>Achievable plans for the bridging finance<\/h3>\r\nInterest rates on bridge loans can be a stinger, but if you can prove to the lender that what you plan to do with the funds is achievable, your chances of a favourable deal will increase.\r\n\r\nThe provider will scrutinise your project to determine whether the investment will be profitable. They\u2019ll look at a number of factors to establish this.\r\n\r\nFor instance, if it\u2019s a complex development project and you have little experience in property, they\u2019re unlikely to be convinced. Moreover, they will also weigh up the possibility of unexpected delays or costs derailing your plans or the chance that there won\u2019t be enough time to market the property if your exit strategy is to sell up afterwards.\r\n\r\nThen there's marketability of the property. If you can provide evidence that it will sell for a decent amount, your chances of passing the <a href="https:\/\/www.onlinemortgageadvisor.co.uk\/bridging-finance\/bridging-loan-application\/">eligibility checks<\/a> with the lender offering the best rates on bridging loans will likely increase.\r\n\r\nIf you\u2019ve been turned down for bridging finance in the past or fear that you might be, make an enquiry and the experts we work with will compare bridging loans and connect you with a lender who may be willing to provide you with capital to bankroll your plans.\r\n<h3>A good security property<\/h3>\r\nAnother thing that will help you get the best bridging finance rates is having a strong property to secure the loan against.\r\n\r\nProperty type and location will affect its sellability, and if bridging providers are convinced you\u2019ll be able to offload it quickly and easily for a lucrative amount, you\u2019ll have access to the top bridging loan deals, subject to other criteria.\r\n<h3>Experience in property development<\/h3>\r\nIndustry experience is by no means essential but, depending on the project and the bridging provider, it can help you secure favourable interest rates on a bridging loan.\r\n\r\nThis may be relevant if it\u2019s a complex development project you\u2019ve taken on. If this is the case, it\u2019s not uncommon for underwriters to request evidence of past deals.\r\n\r\nIf you\u2019re unsure whether you\u2019d be approved for bridging finance, get in touch and the whole-of-market advisors we work with will carry out a bridging loans comparison and connect you with lenders offering the best deals for someone in your circumstances.\r\n<h3>A healthy deposit<\/h3>\r\nWhen buying property with bridging finance, most lenders will expect you to stump up at least 30-35% of the property\u2019s value for the deposit, but superior rates may kick in if you\u2019re able to put down more than that. The best rates tend to appear when you put in 40% upwards.\r\n<h2 id="bridging-for-ltd-company">Are bridging finance rates different for limited company borrowers?<\/h2>\r\nGenerally, no. At most lenders, bridge loan rates are currently<a href="https:\/\/www.onlinemortgageadvisor.co.uk\/bridging-finance\/commercial-bridging-loans\/"> no different for borrowers who are set up as limited companies<\/a>. The majority will treat these similarly to limited<a href="https:\/\/www.onlinemortgageadvisor.co.uk\/commercial-mortgages\/commercial-buy-to-let\/"> company buy-to let-applications<\/a> and may request a personal guarantee from the company director.\r\n\r\nTo get a bridging loan with the best rates, the limited company needs to be a <a href="https:\/\/www.onlinemortgageadvisor.co.uk\/buy-to-let-mortgages\/spv-mortgages\/#requirements-spv">special purpose vehicle<\/a> (SPV) as lenders prefer this setup, though not all insist on it.\r\n<h2 id="london-bridging">Are bridging loan rates any different in London?<\/h2>\r\nThe thing to be aware of if you\u2019re looking for bridging finance in London is that rates are generally no different.\r\n\r\nThat said, some lenders have minimum loan\/property values so high that only projects in the UK capital will meet the criteria. That means that on property in London, if of the right value, you may have access to more lenders, and thus the chances of the top rate are higher.\r\n\r\nIf you\u2019re seeking London\u2019s best bridging finance deals, get in touch and the advisors we work with will compare bridging loan rates in the capital and pair you with the lender offering the best deals for someone in your circumstances.\r\n<h2 id="property-type">How can property type impact bridging loan rates?<\/h2>\r\nThe most common use for bridging loans is to purchase land or property. They can be used to buy residential, commercial, mixed-use and even unmortgageable buildings.\r\n\r\nThe rates you\u2019ll get when using a bridge loan to secure a residential mortgage are generally the same as other property types in the sense that they are dependent on the usual factors.\r\n\r\nLenders decide which mortgage bridge loan rates to hand out on a case-by-case basis, but tend to reserve the best rates for borrowers with the following:\r\n<ul>\r\n \t<li>A strong exit strategy<\/li>\r\n \t<li>Clean credit<\/li>\r\n \t<li>A good security property<\/li>\r\n \t<li>Experience in property<\/li>\r\n \t<li>A healthy deposit<\/li>\r\n<\/ul>\r\nThe exit strategy for residential bridging loans would usually involve shifting the funds over to a residential mortgage.\r\n<h3>Rates on bridging loans for commercial properties<\/h3>\r\nThe rates you\u2019ll get if you\u2019re using a bridge loan to buy a commercial property could be higher, but as long as you evidence a strong exit strategy and have whole-of-market access, a favourable deal is possible.\r\n\r\nHowever, some providers won\u2019t lend for certain commercial property types like petrol stations and restaurants as they consider them high risk.\r\n\r\nThe ones which do might cap LTV at 50-60% unless you can prove it\u2019s a particularly good investment and may request to see a business plan to assess the viability of the deal.\r\n<h2 id="alternatives">What are the alternatives to bridging loans?<\/h2>\r\nThere are three possible alternative options that might be available if you\u2019re having trouble finding relatively cheap bridging loan rates; a buy-to-let mortgage, a let-to-buy mortgage or asset-based lending.\r\n<h3>A buy-to-let mortgage<\/h3>\r\nPeople often choose bridging finance because it is swift to arrange, but if you\u2019re after a development property, it may be possible (and more cost-effective) to secure one on a <a href="https:\/\/www.onlinemortgageadvisor.co.uk\/buy-to-let-mortgages\/">buy-to-let mortgage<\/a> in as little as two weeks.\r\n<h3>A let-to-buy mortgage<\/h3>\r\nIf you already own a property and have equity in it, you can always release said equity and use it as a deposit for a second mortgage, on an investment property. This is known as <a href="https:\/\/www.onlinemortgageadvisor.co.uk\/buy-to-let-mortgages\/let-to-buy-mortgages\/">let to buy<\/a>, and it might be more viable for you.\r\n<h3>Asset-based lending<\/h3>\r\nIf you\u2019re a business owner, you can raise capital by unlocking the cash tied up in your assets. Using your existing assets as security from debtors, stock, plant and machinery or property may be more cost-effective than bridging.\r\n\r\nGet in touch to find out what other options are on offer and receive expert advice regarding the best course of action.\r\n<h2 id="speak-to-expert">Speak to a bridging loans expert<\/h2>\r\nFor advice and deals tailored to your circumstances and needs, <a href="https:\/\/enquiries.onlinemortgageadvisor.co.uk\/match-me-with-a-bridging-finance-specialist\/">speak with an advisor<\/a>.\r\n\r\nThe whole-of-market brokers we work with have access to lenders across the UK, so you can rest assured they\u2019ll track down the cheapest bridging loan rates in the UK for somebody with your personal circumstances. We don\u2019t charge a fee and there\u2019s absolutely no obligation to make an investment.