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Bridging Loan Interest Rates and Costs

Monthly interest rates from:

  • 0.44% per month for loans under £1 million
  • 0.35% per month for loans over £1 million

CMB work with a wide variety of different bridging finance lenders, we have collated the majority of the lenders information below to provide a guide to bridging loan costs. Please note that these rates are a guide to costs, and we recommend that you contact us for a formal quotation to secure indicative terms.

The costs of bridging finance facilities have reduced, with a large number of lenders in the marketplace all seeking to lend against certain types of property.

Bridging loans are available on a wide variety of different types of property including:

  • Residential
  • Residential with remediation works to be carried out
  • Conversion to residential
  • HMO or conversion to HMO
  • Commercial
  • Land with or without planning consent

The rates for each of the above types of property will vary depending on the lender, typically residential property attracts the best rates of finance, with commercial generally being more expensive.

Residential Property with Either Light/Medium Refurbishment

0.44% per month
0.54% per month
0.65% per month

Residential Property with Heavy Refurbishment

0.54% per month
0.64% per month
0.74% per month

Commercial Bridging Finance Rates

0.65% per month
0.75% per month
0.85% per month

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Frequently asked questions

Got a question? We have the answer.

What costs and fees do I need to consider for bridging loans?

Using bridging finance will naturally incur a range of different costs. The headline rate that most investors and developers look for is the “headline rate”, which is normally expressed as a monthly interest rate. These rates will normally be higher than a normal mortgage, therefore bridging finance should normally be considered as a short term funding option.

There are also a number of other costs which need to be considered, as they can be expensive. The best way to properly evaluate different bridging loans is to take account of all of the costs and fees, over the proposed term, then you will have a true cost of the bridging facility. Here we have outlined some of the costs and fees that you need to consider:

  • Interest – interest for a bridging loan can either be paid during the term of the loan or alternatively, and more popularly the interest can be rolled up. This means that no interest payments are required during the term of the loan and the balance will be repaid on refinance or sale of the asset.
  • Facility Fee – this is the lenders arrangement fees. Bridging Finance Facility Fees fees vary depending on the lender and can range from 1-3%. Most lenders will allow the fee to be added on to the finance costs and therefore will be included in the loan facility.
  • Exit Fee – some bridging finance lenders charge an exit fee, which is calculated as a % on the value of the loan at the point of exit.
  • Legal Fees – when taking a bridging loan you will be required to cover the costs of both your legal costs and the lenders legal costs, these costs can vary, so it is important to consider these are part of your quotation comparison.
  • Administration Fees – most lenders include a small administration fee on drawdown, this can range from £0 to £750, however can be higher.
  • Valuation Fees – A lender will normally require a surveyor to visit a property which they are considering financing. This survey is paid for by the borrower and carried out on behalf of the lender. Valuation costs can vary depending on the type of property which is being financed.
  • Default interest rate – Standard terms for bridging lenders are that if the borrower does not refinance or repay the bridging loan facility during the set term, then a default interest rate will apply. The default interest rate is normally higher than the normal interest rate. It is important to consider the costs of these default rates as they can be punitive to borrowers.
  • Broker fees – some brokers charge broker fees on bridging loans, these can range from £0 to a % of the loan amount.

What factors influence the rate of interest for bridging loans?

There are a number of different factors which influence the interest rates for bridging loans, we have included below some of the factors:

  • Loan to value – the higher the loan to value the higher the rate of interest.
  • Type of legal charge – there are a couple of types of different legal charge that a bridging lender can take, a first charge, meaning that in the event of a default the lender is the first in line to enforce and recover their facility, a second charge, meaning that a lender is second in line to enforce, and is subordinated to the first lender. It is also in certain circumstances possible for a third charge, which would sit behind two other lenders. Please note that in most instances the primary, or first charge lender will be required to offer their consent to having a second or other charge placed behind them. A second charge bridging loan will normally be more expensive than a first charge loan because it is higher risk and will be priced accordingly.
  • The type of property – there are three main types of property: residential – houses, flats etc, semi-commercial – e.g. flats/apartments with commercial downstairs, commercial – offices, shops etc. Residential is generally considered to be the lowest risk as there is generally a clear market for these types of assets, commercial is generally considered to be the highest risk, as there is less liquidity for commercial assets. The level of risk is taken into consideration with the rate of interest which is offered by the lender. The higher the risk, the higher the rate.
  • Condition of the property – if the property which is being offered as security is in poor condition, this will generally impact the rate of interest, as if the lender is to enforce, then they may struggle to sell a dilapidated property. Therefore the better the condition of the security property the cheaper the rate of finance!
  • Location of the property – whilst this may not necessarily impact rates directly some lenders will not lend in certain areas of the country, or in Scotland for example, therefore the geographic location will have an impact.
  • Income of applicant – lenders will consider the income of the applicant for bridging loans as a matter of background, although most lenders view this as less important than a general mortgage lender, as a bridging loan lender is normally expecting to be repaid from a refinance or a sale of a property.


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