While bridging loans are growing in popularity as a short-term financial fix not everyone appreciates the costs involved which is why using a bridging loan calculator could be crucial.
Good bridging loan websites offer a calculator to give a rough idea of what borrowers need to consider and while many bridging loans do not have a monthly repayment the borrower will instead repay the loan plus interest when it is due to be repaid.
When it comes to using a bridging loan calculator, for instance, the lender will need to know the type of bridging loan being requested and these will, for example, be for standard, second charge or refurbishment bridge loans. These are the most popular uses.
Borrower looking for short term bridging loans UK
The borrower looking for short term bridging loans UK also needs to know the valuation of the security property, this will be the market value though borrowers can obtain bridging loans for more than one property.
The calculator will then add the broker’s fee to the actual/net bridging loan amount and that becomes the initial loan figure. After this, the lender’s fee, which is usually around 2% on average, is then added, and there might be other administration fees including an assessment fee of around £300. Some lenders also have a transfer fee of around £30.
This then brings the total bridging loan amount and the borrower may also need to reveal any current borrowings outstanding for a second charge purpose. They then need to decide how long they want the term of the bridging loan to be which is generally up to one year but some lenders offer bridging loans for longer.
A lender of bridging loans UK
And that essentially is all a lender of bridging loans UK needs to know and once the borrower has a rough idea of the fees they may progress with an application though it’s usually best to do so through a bridging loan broker because they will appreciate and understand the terminology and what documentation the lender may require.
The other consideration when using a bridging loan calculator is that most lenders generally only have a maximum loan-to-value (LTV) of 75% and if the borrower requires this to be more then they’ll need to deal directly with the lender.
Another important consideration when applying for a bridging loan is to understand that it is to be a viable proposition to the lender and the bridging loan rates will probably reflect this.
All bridging loan borrowers also need an exit strategy in place so the lender knows how long the loan will be for and how, more importantly, the loan will be repaid.
For more information about bridging loans and how to use a bridging loan calculator, contact the helpful team at The Bridge Crowd.