Cheap bridging loansHow are cheap bridging loans defined? For the best deal, you have to look at it twofold. The first thing to look at when searching out a lender for cost effective short term finance has four parts to it and would consist of you checking to see if there are any set up or administration costs, brokers charges, legal fees or even valuation/survey overheads that need to be paid. If you are already familiar with how bridging loans work, then feel free to skip directly to our enquiry form to submit your request to multiple actual lenders with no commitment or obligation or agreeing any financing with any of them, so that you can compare cheap bridging loans online. |
The second thing you need to look at is the actual rate of interest. As a bridging loan works slightly different to longer term conventional finance, we will start there by making a comparison of secured first so you can see in your mind's eye which form of financing would be best for you.The keynote to bridging compared to a conventional secured loan is that the interest is charge monthly rather than added to the value of loan immediately on payout.
**The following rates are for guidance only and may not reflect current rates of interest from any lenders.**
A conventional secured loan could be charge at 5.5% interest over a three year period, so if you were to borrow twenty thousand pounds, the total value of what you would repay before any set up fees would be the 5.5% of the twenty thousand pounds multiplied by three years. So the total amount you would pay back would be the initial funding plus eleven hundred pounds per annum. A total cost thirty three hundred pounds (£3300.00) in interest accrued at the beginning of the financing.
Please be aware that there could also be early repayment penalties factored into your agreement, so it wouldn't actually pay off to clear the advance before the end of the term of loan. £23,300.00 over thirty six months, meaning a set repayment plan of around £650.00 per month.
Bridging loans
Bridging loans are not front loaded with interest and if paid off quickly, as they are designed to, can save you a small fortune in interest. For example, borrow £27,000.00 at 1% interest per month. You never actually owe more than borrow. However each month your interest will be calculated. £270.00 will be payable. You have borrowed seven thousand pounds more and have paid almost four hundred pounds less in your repayment. At one percent interest, that would be your monthly interest payment on a bridging loan. £270.00, however, you are not chipping away at the total balance of the loan, it is ONLY an interest payment, BUT, if you was to clear the full amount within the next thirty days, you would only pay another £270.00 interest repayment with the full amount, meaning over the space of 30 to 60 days, it cost you £540.00 to borrow £27,000.00.
Obviously the longer you let the bridging finance run, the more in interest you would pay, but you would have to a full year to get anywhere near the interest charged on a conventional secured loan. So for instance, if you clear the full amount within 6 months, you would actually pay back around £1620.00 and be free of the credit, where as with a normal loan, based on the above estimation on £20,000 at 5.5%, you would have only paid the interest off and would still owe the full amount you borrowed.
Bridging loans are designed to be paid back quickly, and if you do, it is a much cheaper option than traditional secured borrowing. Please be advised that with all secured borrowing, the property used as security is at risk of repossession should you default on payments, or fail to clear the full amount within the specified time frame. So visit our enquiry page to get quotes so you can compare cheap bridging loans online with no obligation to enter into any credit agreement.