Bridging Loans

Bridging loans are there to help you bridge the financial gap when you need it most. Our leading lenders have a wide range of loans available at competitive interest rates and with a choice of repayment terms to suit your financial requirements.

If you are a homeowner you could consider secured bridging loans. These loans are backed up by the collateral in your property and because the lender has the added security against your failure to repay the loan, interest rates tend to be lower. There is however the risk that if you default on repayments and are unable to pay back the loan as agreed you are risking repossession and will eventually lose your home. Unsecured bridging loans on the other hand require no security or backing collateral from the borrower and this means that the lender is taking a greater risk lending the money. As a result, interest rates for unsecured loans are higher. Even though the borrower is taking less of a risk by not using their home as security, it is possible that the lender may act aggressively if the loan is not repaid as promised and could take the borrower and their property to court. It is important to make sure that your monthly income and expenditure has sufficient surplus to cope with the repayments on a bridging loan before you commit.

Bridging loans are usually for a shorter period because they fill the gap in finance between one investment and another and like all loans are subject to an interest charge by the lender. The interest is expressed as an annual figure, the Annual Percentage Rate or APR and lenders refer to their typical interest rate. This is purely an indication of the interest rate you are likely to be offered as it is the rate which the majority of successful applicants have received. The actual APR you are offered will depend on the amount of the loan, the repayment term and the lending company’s assessment of how likely you are to pay the loan back as agreed. Here your credit record and present circumstances will be considered. Our lenders assess each application for bridging loans individually and flexibly.

Comparing APRs of bridging loans from different lenders is certainly a good indication of just how competitive they are but another factor is also important. If you think you may want to settle your loan sooner than planned then it is a good idea to check the lender’s policy on early settlement. Some lenders charge up to two months interest if you want to pay off your loan before the agreed end of term. This is called a redemption penalty and could add an unbudgeted amount to the total cost of your loan. If you would like the flexibility of paying off your loan earlier then perhaps you should consider bridging loans with no redemption penalty.

Being familiar with the different ways in which lending companies quote their interest rates could help you to choose the loan that suits your requirements. Variable interest rates mean that during the course of your loan repayments the amount you pay each month could vary depending on what happens to the bank base rate. This could make budgeting a little more difficult but you may benefit if the base rate drops. Fixed interest rate means that no matter what happens to the bank base rate your monthly repayments will remain the same throughout the term of your loan.